Volume_Analysis3 - Volume Analysis (Part III of IV)...

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Volume Analysis (Part III of IV) 05/21/01 03:41:02 PM PST by Dennis Peterson Volume tells us how many shares are traded and thus gives us a measure of buying and selling enthusiasm. Security: QQQ Position: N/A You can also see volume and price in action by taking a larger view and using a moving average. I have annotated volume in Figure 1 with a 10-day moving average. You can see volume is in-gear with price from early 1999 to September 2000. As prices increased from early 1999 through April 2000, volume also slowly increased. Price action and volume were still in-gear up to September 2000. After September the selling wasn't due solely to profit taking or price adjustments; it was panic-type selling. A market that loses more than 70% (from QQQ=120 to QQQ=36) isn't normal. The market didn't get to its current value of QQQ without some thrashing however. Going back to the article "Using Gann", posted 4/20/01, you will see that the consolidation zone was rather large, starting at QQQ=84 and ending at QQQ=54. The market did struggle with the decline in QQQ. Figure 1: QQQ daily price and volume. Volume is overlaid with a 10-day moving average. Graphic provided by: Metastock . Graphic provided by: Data vendor: eSignal .
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But how far back do you need to go to find the market's comfort zone? Not much more than a few months, maybe six. Looking at QQQ, with much of the detail lost due to the compaction
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Volume_Analysis3 - Volume Analysis (Part III of IV)...

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