Volume_Analysis4 - Volume Analysis (Part IV of IV) 05/21/01...

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05/21/01 03:55:43 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: $compq Position: N/A While it's necessary to be aware of demand versus scarcity to explain tops and bottoms, it's still helpful to think of volume as a measurement of enthusiasm. Suppose you were to compare today's enthusiasm for price increases or decreases with the enthusiasm from the recent past. For example, if prices are in an upswing that is part of an overall uptrend, then obviously the equity costs more now than it did previously. Looking at the previous upswing, how enthusiastic is today's buying compared to the buying of the most recent past upswing? When I start comparing two different time frames, I am on the path to creating a momentum indicator. Figure 1: Nasdaq composite daily prices (bottom chart), on balance volume (OBV) of Nasdaq (middle chart), and momentum of OBV trends (top chart). Graphic provided by:
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Volume_Analysis4 - Volume Analysis (Part IV of IV) 05/21/01...

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