Add Stock Volume & Quantity to Analysis
It used to be that price was the most important indicator on a stock chart. Most Stock Indicators, Market Breadth Indicators, and Sector Indicators are based solely on price and time due to the importance weighted on price action in the past. Most stock indicator writers of the 20th century focused on writing Price and Time Indicators to reveal patterns not easily seen in price charts of that era.
One analysis that price is unable to provide in the new Market Structure where the giant lots do not disturb price and High Frequency Traders (HFTs) are unable to front-run these giant-lot orders is stock Volume patterns. Stock Volume bars declining as price moves up is indicative of smaller lots buying speculatively, as seen in the last several days in the chart example above.
Another area to monitor is the Dark Pool Quiet Rotation™ pattern. They usually show up in sideways action either in a Bottoming Formation, Topping Formation, or Platform Candlestick Pattern. During the sideways action, the Dark Pools strategically establish trigger order price levels, allowing price to move as it normally would without their interference.
As you can see in the chart window for the Accum/Dist indicator, there has been a Dark Pool Quiet Rotation pattern even while price holds and runs up. Then, High Frequency Traders drive price down for a one-day anomaly Candlestick Pattern, which is indicated by the short red arrow. The Dark Pools’ trading ceases immediately on that day, but it resumes the following week and into current price action. Meanwhile, smaller lots, who are mostly Individual Investors and Retail Traders, are buying the “dip”.
Martha Stokes CMT
TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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