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----- Original Message -----
From: "Al Taglavore" <altag@xxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Sunday, October 08, 2000 11:09 PM
Subject: Re: a beauty of a classic H&S
> Mr. Maas,
>
> The volume factor is not a theory, it is critical as to what the investor
> psychology and reactions were that caused that pattern or any TA pattern
to
> form. To further confirm, I would refer anyone interested to John
Murphy's
> book "Technical Analysis of the Futures Markets", page 111, under the bold
> heading "The Importance Of Volume". Mr. Murphy states, "The accompanying
> volume pattern plays an important role in the development of the head and
> shoulders top as it does in all price patterns." This is a direct quote
> from the book. My copy was published in 1986. If you are going to be in
> attendance at the TAG seminar next week, I am certain that John would
> discuss this with you....he has answered all of my questions in the past.
>
> Also, Mr. Murphy states on page 153 of his book concerning the diamond
> formation, "It is a relatively rare pattern but is more often seen at
> market tops. More often that not, it is a reversal rather than a
> continuation pattern. He also discusses the volume reactions that should
> accompany the pattern.
>
> Good trading,
> Al Taglavore
>
>
> ----------
> > From: A.J. Maas <anthmaas@xxxxxxxxx>
> > To: Metastock-List <metastock@xxxxxxxxxxxxx>
> > Subject: Re: a beauty of a classic H&S
> > Date: Sunday, October 08, 2000 8:06 PM
> >
> > 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
> >
> >
>
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