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Whether my idea of cumulative allocated volume is "right" or "wrong"
remains to be seen, but it is not a trivial thing that the CAV is
confirming what the underlying index itself it doing. One can legitiimately
question whether or not the exchange data is providing an accurate picture
of the underlying technical strength or weakness of the market.
So that others can understand what made me wonder what was going on with
volume, look at the first chart, which takes the official NYSE data for
advancing and declining volume, and charts the net volume cumulatively. If
the exchange is taking downtick trades and accumulating that as declining
volume, and if it is taking uptick trades and accumulating that as
advancing volume, then I would unqualifiedly want to base any analysis on
the exchange data. But, if the exchange is doing something less rigorous,
then it is likely that we will get a misimpression of the flow of money
(price * volume) through the market.
Also remember that I was looking for something that would interpret volume
data for individual equities or trading instruments, in which I cannot get
advancing and declining volume data. The opportunity to compare my own idea
of allocated volume with that of an official source, such as the NYSE and
its composite data, was an opportunity that I felt I should not overlook.
Since I had some serious questions about the exchange data, I thought I'd
post my idea and charts on this forum.
Anyway, the two approaches produce different pictures of
advancing-declining volume, as you can see for yourself.
And by taking my allocated volume to generate an MACD-style indicator (show
in a post yesterday), some significant trading signals seem to appear at
appropriate places on the price chart.
Joe
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