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In a message dated 97-10-18 14:55:42 EDT, knight@xxxxxxxxxxxx writes:
<< If you have a market that is displaying BOTH low ADX AND Low volatility,
it is usually
SHOWTIME. : ) >>
Walt,
Wouldn't Bollinger Bands provide a similar picture? A nice b/o point
for stocks is often: Close to the rising 50 dMA, tightening Bol. Band based
on 20 dMA, lower intra-day volatility, and volume falling off. Since the 50
dMA often provides support, the risk is limited, and defined. If/when price
breaks above the B.B., it displays an explosion of volatility in price and
volume. If it breaks back into the B.B on heavy volume, the b/o is false and
consider shorting. For an example see TLAB at the beginning of Sep. A b/o,
but on weak volume, and then a colapse. I have seen several failed b/o's in
the past month; this correction has been hinted at through price action.
For a succesful b/o based on the above see TMSR.
I look for these low current volatility releative to historic volatility
stocks constantly.
Regards,
RF
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