Source: http://prudenttrader.com/pt/index.php?option=com_content&task=view&id=632&Itemid=31∞
Written by Bill Zimmer
Monday, 07 July 2008
I have been a subscriber to TeleChart since the early 90’s. To get a feel for the markets, Don Worden looks at today’s dominant price and volume relationships over various groupings he keeps.
A few definitions from comments on 2/13/08 -> Dominant Price-Volume Relationships. In a given day, there is generally a DOMINANT Price-Volume Relationship. It is only one of four Possible DOMINANT Price-Volume Relationships. These are PDVD (Price-Down Volume-Down); PDVU (Price-Down Volume-Up); PUVD (Price-Up Volume-Down); PUVU (Price-Up Volume Up).
Dominance of PDVD is basically a typical relationship during a market trending down. It means the decline probably remains in force. However, in a correction within an uptrend, it is definitely bullish. Dominance of PDVU is especially bearish during a correction within an up-trending market. In a bear market, it can be either bearish or bullish. It is bullish in a bear market that is becoming oversold and may be ripe for a "selling climax" or (as it is now more often referred to) as a "capitulation." Dominance of PUVD is the most bearish of the four possibilities--especially within bull markets. Dominance of PUVU is the most bullish of all four possibilities, under any conditions.
I thought it might be interesting to graph these price volume relationships against a couple of indexes, to give you a feel. The first indicator box is the percent of stocks moving on volume greater than the previous day’s volume. If the net difference is positive, i.e. more stocks increasing than decreasing on increasing volume the net percent appears above the zero line. If the difference is negative it appears below. A bold bar indicates greater than 50% moved in that direction with that volume relationship today.
Conversely the bottom indicator box looks at the percentage of stocks that moved in either direction but volume was less than the previous day.
Dominant Price & Volume Relationships
Written by Bill Zimmer
Monday, 07 July 2008
I have been a subscriber to TeleChart since the early 90’s. To get a feel for the markets, Don Worden looks at today’s dominant price and volume relationships over various groupings he keeps.
A few definitions from comments on 2/13/08 -> Dominant Price-Volume Relationships. In a given day, there is generally a DOMINANT Price-Volume Relationship. It is only one of four Possible DOMINANT Price-Volume Relationships. These are PDVD (Price-Down Volume-Down); PDVU (Price-Down Volume-Up); PUVD (Price-Up Volume-Down); PUVU (Price-Up Volume Up).
Dominance of PDVD is basically a typical relationship during a market trending down. It means the decline probably remains in force. However, in a correction within an uptrend, it is definitely bullish. Dominance of PDVU is especially bearish during a correction within an up-trending market. In a bear market, it can be either bearish or bullish. It is bullish in a bear market that is becoming oversold and may be ripe for a "selling climax" or (as it is now more often referred to) as a "capitulation." Dominance of PUVD is the most bearish of the four possibilities--especially within bull markets. Dominance of PUVU is the most bullish of all four possibilities, under any conditions.
I thought it might be interesting to graph these price volume relationships against a couple of indexes, to give you a feel. The first indicator box is the percent of stocks moving on volume greater than the previous day’s volume. If the net difference is positive, i.e. more stocks increasing than decreasing on increasing volume the net percent appears above the zero line. If the difference is negative it appears below. A bold bar indicates greater than 50% moved in that direction with that volume relationship today.
Conversely the bottom indicator box looks at the percentage of stocks that moved in either direction but volume was less than the previous day.