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Lionel, in addition to the points you make there was a serious flaw in the
way Granville determined OBV. He applied all of the daily volume either to
the up-volume or down-volume depending on whether the stock closed up or down
for the day. Thus a stock closing up 1/8 point on one million shares would
have the same increase in OBV as a stock moving up 2 points on one million
shares. I read an article in the early '70's that calculated the up-volume
as: ((High - Open) + (Close - Low))/2(High - Low). The reverse for
down-volume. This gives a much more accurate evaluation of
accumulation/distribution.
The first edition of Perry's book was published in 1978. Based on its
success, Perry was asked by Conti Commodity in St. Louis to manage a
commodity account ($10,000 minimum to join). It did not do well in the 1980
swing and was closed some time later. Which just goes to show that just
because you can write a good cookbook doesn't necessarily mean you're a good
cook.
Joe Nemecek
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