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E&M also write that a Diamond is "only a correction" pattern. Now, for the
life of me, that must be (along with their personal Volume theory) one of
their greatest bloopers in that further excellent splendid book.
-----------------------------------------
For starters
-you should not believe everything that's written.
Second
-personal experiences are more valuable.
Third
-other people's theories should not come between you and your Charting.
Fourth, the E&M's personal volumes theory is that of the 194x-era, where:
-Exchanges were basicaly local affairs {now it is an International affair, even
an Internet-off-hours affair, where trades made outside the Exchange will
not ever be included in the daily volume that gets traded on that Exchange}
-Trading baskets hardly existed and Derivates etc did NOTexisted, eg so
at that time the stocks were the only traded underlays back then, whereas
nowadays the derivates traded greatly overexceed the stocks traded.
-(Personal) Computers had to be invented yet.
Fifth:
-Price rises or falls aren't based on volume, but these are based
-on the supply and demand (both incl. competition)
-on the free market flow
Many of these aspects that we now know, weren't known or present back
then. And if these latter 2 basic are now also present in other markets than
there where the stocks are originaly traded, eg see above global+internationaly,
then naturaly for minimum, a distorted picture is painted if you would stick to
and only focus on that one(1) of the many available markets that might make up
the Price. Price is thus a very broad global ruling, wheras volume is a minor local
and statisticly an unimportant and for Charting a minimal value.
Sixth:
-Volumes should not even come between you and your Charting, eg between you
and Price, because of its contradictions.
-Contradictions(Price/Volume) in the markets:
-Most recent: -the chips, pc's and other components' prices that despite the
huge demand, and thus increased volumes, have all dropped
tremendously since the early 90's.
-the oil prices that despite the huge demand, and thus increased
volumes, have still leveled with the 1960-1970 price ave's.
-internet access that was only recently quite expensive, wheras
despite the huge demand, and thus increased volumes, now most
providers will give away their FREE internet access.
-the automobile prices, that despite (or is it because) of its increased
demand, thus increased volumes, have only quadrippled in price
since the late 1960's.
-the house prices, that despite (or is it because) of its increased
demand, and thus increased volumes, have 10+ fold multiplied
since the late sixties/early seventees.
-Compare a trade in the futures market using futures' volumes of the underlay.
Now also compare it using its options volumes(eh.....what to use: calls or puts or
both??). Then also compare these vs local stock market volumes. Finaly also
compare these to its internationaly elsewhere traded volumes. For example
use the Dow Indu.
Now who's volume figures to believe when charting a Dow's H+Ss pattern?
Seventh:
-I am for this mail bypassing the fact that for "esthablishing" the daily traded
volumes, on some Exchanges, "tossing a coin" is the eod rule-set to "only
get some figure" out to the dataproviders.
-I am also for this mail bypassing the fact that direct trades, between parties
outside the Exchange, will not be included in the Echange's daily volumes.
-I am also bypassing the fact that large trades made on a falling or a rising
price during that day, will not be reflected in the eod volumes, eg a trade
can be "heavy" but not known is if someone's selling or buying, eg a heavy
traded falling trade or a heavy traded rising trade.
-I am also not including in this mail if it is a "thin" armered stock or a "thick"
armered stock, where large trades in a thin armered stock will be much
more reflected in its daily price (and volumes) than the same or a small trade
in a thick armered stock.
------------------------------------------
The volume's myth unraffled and therefore also E&M's very personal (see above)
-stemming from ancient 194x's theory- unraffled.
(All done in a very simplistic way only).
Regards,
Ton Maas
ms-irb@xxxxxxxxxxxxxxxx
Dismiss the ".nospam" bit (including the dot) when replying.
Homepage http://home.planet.nl/~anthmaas
----- Oorspronkelijk bericht -----
Van: "Al Taglavore" <altag@xxxxxxxxxx>
Aan: <metastock@xxxxxxxxxxxxx>
Verzonden: zondag 8 oktober 2000 19:38
Onderwerp: Re: a beauty of a classic H&S
> > H+Ss patterns do not require volumes. Valid patterns require some form of
> a head
> > (a High or Low) and a shoulder (when possible 2 or sometimes more
> shoulder(s)).
>
> Please refer to Edward's and McGee's "Technical Analysis of Stock Trends"
> page 63,64,65,66. In part:
> (p.64) A. A strong rally ..on which trading volume becomes very heavy.
> B. Another high volume advance which reaches a higher level that
> the top of the left shoulder...
> C. A third rally, but this time on decidedly less volume than
> accompanied the formation of either the left shoulder or the head...
> D. Finally , decline of prices in this third recession down
> through a.." neckline."
>
> Note that each and every item cited in A,B,C and D is essential to a valid
> Head-and-Shoulders Top.
> (All of this is on p.64)
>
> Because of the lack of volume confirmation, that is why I suggested that
> this could be a triple top formation.
>
> >There are tons of Indexes and Indices having H+Ss patterns, that
> > simply cannot be measured by/on volumes, since that their volumes cannot
> or will not
> > be calculated.>
>
> I do understand. My reference was to the stock (BRCM) that was mentioned.
>
> Al Taglavore
> ----------
> > From: A.J. Maas <anthmaas@xxxxxxxxx>
> > To: Metastock-List <metastock@xxxxxxxxxxxxx>
> > Subject: Re: a beauty of a classic H&S
> > Date: Saturday, October 07, 2000 7:45 AM
> >
> > H+Ss patterns do not require volumes. Valid patterns require some form of
> a head
> > (a High or Low) and a shoulder (when possible 2 or sometimes more
> shoulder(s)).
> >
> > A neckline can then be drawn from (one of) the shoulder(s)'s high or
> low(depending
> > on the pattern formations direction). Then by collapsing the pattern into
> the opposite
> > direction of the pattern's main trend, is when a target can be calculated
> (will be visable).
> > The distance between the Head and Shoulder High or Low can be added to or
> be
> > deducted from the neckline. That is the science part. And put in it's
> most simplistic form.
> >
> > The art part is that it is not always scientificaly also the end target
> for a correction,
> > that a present H+S's pattern minimaly indicates. Eg., Price can move much
> higher or
> > lower as is indicated, tho will not always.
> >
> > The art part too is the volumes myth. (Volumes added is more of a
> personal thingy).
> >
> > Trends and a Trend rises or falls do not require an increase or decrease
> in volume.
> > If a Price wants to go up or down, then it will go up or down, despite
> the / any
> > change in volumes. > --The CRB index and the Intrest Rates to name a
> few.
> > --The CPI, all of the ww Currencies, OIL, Gold and Silver to name a
> few others.
> > All are capable to produce H+S's patterns.
> >
> > > Does the volume requirements of a H&S apply to BRCM? Should not the
> volume
> > > be much greater on the left shoulder, climaxing at the head and much
> less
> > > volume on the right shoulder? Rather than H&S, could we not be seeing
> a
> > > triple top?
> > >
> > > Al Taglavore
> > >
> > > ----------
> > > From: T.E.M. Lockefeer <sky40912@xxxxxxxxx>
> > > To: metastock@xxxxxxxxxxxxx
> > > Subject: a beauty of a classic H&S
> > > Date: Friday, October 06, 2000 12:22 AM
> > >
> > > List :
> > >
> > > Look at BRCM chart and you will find (starting about July)
> > > a Head and shoulder formation "out of the book" .
> > >
> > > Has anyone of you research about the % downsize of
> > > H&S formations ?
> > >
> > > Thanks and good weekend.
> > >
> > > Theo Lockefeer.
> > >
> > >
> > >
> > >
> > >
> >
>
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