Other than tonights Silver post…here’s my bias on the DOW!
Posted by MC on Oct 5, 2008
This is uncharted territory/circumstance. Nobody has a crystal ball so all I can do is give my 2 cents. 
Now that said I can begin to make a bull case but I’ll let the chart speak for itself because there more bear$hit on the chart than bull$hit.
Of course the last candle is 1 week in and hasn’t printed so we can sort of rule that out, although it HAS made a new low so don’t totally discard it. Macd histo has NO divergence in this monthly timeframe. In fact it’s just straight down with no flinching. Also there is room to move down to fully test support. I’d put absolute make or break support in the mid-high 9700’s myself. That’s all the bear case, added to the current trend you have a strong case for continuation down.
As for the bullish side it’s mainly the fact that there was buying pressure on both the last tests of the channel lows. BUT buying pressure does not equal a reversal 9/10 times. If we slide to lows at/or above that support on dried up volume with histo divergence that would show me the selling pressure has dried up. The fact that there was heavy buying pressure doesn’t discount the fact that for every buyer there was a seller. The selling pressure though somewhat offset was undeniable and panic like that won’t likely turn on a dime.
Big volume is a warning sign of a possible flush though most often there is more price action left where the market probes further for buying/selling pressure (unfinished business). I have yet to see a convincing case of bottoming action. I’m pretty fond of this setup…If we were in a bull trend and I saw the reverse action I just described I’d say look out below…in fact this was how I picked the 14k top on the Dow a year ago. 
People are on edge…based on my Volume Based Price chart put yourself in the auction along with the majority of the volume in this range. What would you feel if you just had 4 years of profits turn even or slightly red?
Still a bear bias for me, won’t effect my daytrades though thank god. 
More insight, building on my previous forum posts on context
Posted by MC on Aug 30, 2008
First see http://www.tradersbase.com/forum/technical-analysis/743-some-thoughts-volume-taken-context.html
Trendlines work the same as structure support in their use to see which side is winning the tug-o-war. A candle with a long wick bouncing off support with big volume could give insight that the bulls defended that level with vigor and probably ran stops to cause a spike they used to buy cheap. That same candle with no support causing the bounce would mean alot less in terms of a traders odds. This is why context is so important, the market 9/10 times won’t reverse in the middle of nowhere.
Now small/tight candles at support/resistance shows rotation and balance which I find as important as wicky candles. The more volume, the more rotation came in at that level. Everyone loves BIG candles, but super small candles with big volume are at least as important. If you see a big volume on a tight balanced candle get ready cause bets have been placed by both sides and only 1 can win that move in the end. Generally it’s a fade situation because if you’re at support and bears can’t drive it lower bulls stepped in to defend or vice versa at resistance.
Final thoughts for now…
BIG candles regardless of volume = momentum
Go with the flow till it retraces or balances/rotates.
Tight, high volume candles = balance nearing an end
Balance will give way to momentum soon, let the direction show itself then hop on the momo train.
New article on the forum about using volume and trend following.
Posted by MC on Aug 17, 2008
Check it out via the link below. 
MC
http://www.tradersbase.com/forum/technical-analysis/743-some-thoughts-volume.html#post4342
Volume
Posted by Cire2222 on Jul 30, 2008
I wanted to point out some volume indications On both a weekly and daily basis that seem to indicate bullish activity
Below is a weekly chart of the SPY (S&P tracking ETF) I wanted to note the volume at the pivots
Drill down to a daily chart and see more bullish volume action
Hidden buying and selling?
Posted by Cire2222 on Jun 18, 2008
Hidden buying and selling?
In the forum we have had some talk of hidden buying and selling and some questions were asked. MC started a thread to help answer the question here http://www.tradersbase.com/forum/technical-analysis/663-define-hidden-selling.html You may not like to trade off volume alone but I think it could be a big help to any trade set-up. Today I just so happen to see something that fits into this topic. Below is a chart that points out some possible hidden buying that tipped me off to look for a long set-up on an intra-day basis.
What I saw was a large spike in volume (biggest of day) with a short body candle after a big swing down. To me this means that buying volume has stepped up to soak up the sellers. Had the market been moving up strong going into that I would of seen it as sellers dumping into the buyers. This gives me the okay to take a long signal, today it worked out for a good day trade.
What are gaps, why do they occur, and how can you profit from them?
Posted by MC on Jun 12, 2008
What is a gap?
A gap is shown on the charts any time you have price open outside the prior time period’s high or low.
The below section will go into details on why gaps on big volume are significant and how you can take what I’m teaching and use it to recognize the psychology behind those moves. There will be small gaps or gaps on low to normal volume. These are events of no interest to us. It’s the gaps on abnormal volume that should catch your eye and make you want to know what they did that for. Bottom line…large volume is the pros at work, our job is to realize why they are moving that many shares and follow their lead.
Bigger notable Gaps are used for 2 purposes…
1) A breakaway gap moves fast and is used to eliminate concerns of supply slowing the run. The breakaway gap is used so they can accomplish 2 things. One is to lock OUT new shareholders from playing along because it’s “too high”. The 2nd thing is to lock IN people that are in the red, which avoids weak hands selling into their rally. This elimination of supply ensures a continued powerful move. This is generally done on a beat up play once big money have their fill of cheap shares. They could however use this to panic people into selling, using peoples greed against them on all time highs. The latter is a way the pros could buy high knowing they will soak up the float and sell higher. This is very rare in my experience however, pros don’t like to pay a premium.
(HINT) Look for any pullbacks to be UBER light volume if it’s a legit breakaway gap. This could be played by trying to get in as close to the low of the gap as possible to ensure a tight stop.
2) Any other gap would be used by pros to hide their own supply trail. These gaps would create early excitement as well, but in this case to sucker unsuspecting traders in.
(HINT) This type of gap tends to have the next day close lower on fairly big volume. Often you will see a retracement and then a test of the prior highs on UBER light volume showing the professional money has no interest at paying the current price. A downtrend commences till the pro money buys back in. This could be played waiting for that test of highs and then fading the move once volume ticks up showing emotional trading.
Here’s a good example of a short I called using a weak gap. It was a HUGE gap so “how could that be weakness”. I was told I was crazy for thinking of shorting, despite telling people to wait for the breakdown. Sometimes you need to be cautious no matter how bullish it may seem. 
Enjoy, good trading.
In dead mans zone?
Posted by Cire2222 on Jun 12, 2008
after looking at the daily chart I can’t find many reasons to make too many moves right here right now. With a bearish view it’s a bit late in the fall to take a low risk short entry, with a bullish view there is very little support and very little signs of a reversal. Times Like these I just like to day trade and stay out of swings. This late in the game it may be best to just wait and see how the week ends. For now I wanted to post a chart on has happened and also a couple charts that I came up with on a search for a bull case.
ES 5 min chart of todays action
were we given a warning?
Posted by Cire2222 on Jun 8, 2008
Just something I noticed the day before fridays large sell-off. About mid day thrusday we had been trending up all day, then a quick spike down came in with the largest volume of the day before the market continued it’s rally higher took give the look of a very bullish day at the close. On friday as soon as that same area was re-tested the surge in selling came again. Black box selling?? who knows. Below you can see a 2 day 5 min chart of the S&P mini futures.
What a week for the markets!
Posted by MC on Apr 18, 2008
With premarket we are a hair over the rangebound resistance.
Not going to be easy to hold that, not to mention we have that 2nd area of structure resistance with the 50ma backing it so if we break it shouldn’t go far at right away.
Given this weekly chart, barring a disaster we will close above the downtrend. A pullback test of that new support and/or consolidation under the 50ma will probably be needed if this is the real deal. Disregard the volume, it’s not accurate since this is a TOS continuous chart and they have bugs to work out.
That’s my take anyhow
What Technical Analysis will NOT do for you
Posted by MC on Apr 17, 2008
Technical Analysis or TA for short is a tool used by most traders to some extent. It’s the artistic science of using charts, volume and/or indicators to try and pick trades that will be high probability winners.
Newer traders (myself included) often waste a ton of time early on, learning 20 indicators thinking they’ll gain the answer to profit. I think it’s important to address what TA will NOT do for you. TA is NOT the holy grail and never will be. There will never be an indicator that will eliminate the mental edge required to profit from trading. This is why I think it’s best to read some market psychology books before anything else to get the proper core mindset. The true holy grail is your mind, and the better your psychological conditioning the better you are at controlling money management/position sizing. Risk management and controlling emotion are also traits that proper TA training can help foster and develop in a trader.
Lets dig in a bit further…
TA helps us formulate an educated guess about what’s most likely to happen next based on how the chart depicts supply and demand. Also formations and indicator levels that the majority of people use can help. There is a ton of interpretation which should improve as we become more educated through screen time and experience. The better your mentor and the more time you invest in screen time the faster your learning curve. For many, TA is the easy part of the puzzle and the mental side is what takes more effort and time to overcome. This is because our very upbringing and how society revolves is the opposite of how you profit in the market.
Why do I use the term “guess”? Well what a chart cannot tell us is who’s on the sidelines waiting for a certain trigger to jump into the market and buy or sell short. There are millions if not billions of minds at work in the market determining what fair value means to them. The market is an auction and someone’s thought about perceived value changes on every tick. This makes the market ever changing and what HAS worked is not guaranteed to work going forward. Chop days show a balanced market, other than that the market is making waves to try and find that balance between buyers and sellers.
So in closing, a good rule of thumb in the market is look at why you should NOT take the trade and TA can help out.
Focus on mastering a few select indicators and use them consistently since it’s consistency that will lead you to profit in the markets.
Good trading, hope this helps. Stop in the forums and check all our great content that keeps growing.
www.tradersbase.com/forum
