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I believe your conclusions are correct to a point.What caused the volume and
volatility swings were negative guru comments and Microsoft anti-trust
rumors which brought out the weak and the strong hands in the same day.
These are phenominal trading opportunities.Based upon this I am giving
consideration to fully capitalize an e-mini Nasdaq for 4000 points or
$80,000.If you are right on any position you will win.If you are wrong you
can pretty well gut it out to a reversal.Not for the faint hearted.
Sincerely,
John
>From: Ronald McEwan <rmac@xxxxxxxx>
>Reply-To: rmac@xxxxxxxx
>To: <realtraders@xxxxxxxxxxxxxxx>
>Subject: [RT] Re: US Govt. Manipulation of Stock Market
>Date: Fri, 7 Apr 2000 15:16:21 -0400
>
>I was examining what had happened Tuesday to see what useful information
>could be obtained. I did a study of the relationship of volatility and
>volume. I used the NYA index because it reports volume. I used the high
>low statistical volatility for the volatility measure. I took the 20 day
>average of both the total NYA volume and the high low statistical
>volatility measure. Based on my results, I believe that with a continued
>increase in daily volume on the exchanges, that there will be a
>subsequent increase in volatility. With the increased volatility you will
>see 500 and 600 point swings on the INDU and NASDAQ more frequently. The
>exchanges are doing everything then can to increase volume, so make sure
>you keep a good supply of aspirin. I think what happened Tuesday was due
>partly to the huge increase in volume we have been seeing. The greater
>the volume, the greater the volatility, the greater the intraday swings.
>We have seen this already in the Internet stocks exhibiting the same
>behavior.
>
>Ron McEwan
>
>high low statistical volatility formula:
>
>=(0.627*SQRT(365.25)*LN(High/Low))
><< volatility_volume.gif >>
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