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vsa with Malcolm

  • #1,981
  • Aug 6, 2010 2:21pm Aug 6, 2010 2:21pm
Quoting HiddenGap
Funny how things work sometimes. I got a couple of questions by pm and I found this chart example that answers both questions.

Question 1a: Why aren't we shorting the close of the No Demand?

Answer: Take a look at the chart. Ignore the fact that the No Demand is on the wrong side of the DBPL for now. Many times after a No Demand we will see either a Trap Up Move or an Up Thrust. Either of these types of bars/candles put immediate pressure on you and can get you stopped out prematurely. Therefore, it is recommended to place an order...
Once again thanks for your awesome post.
  • #1,982
  • Aug 6, 2010 2:41pm Aug 6, 2010 2:41pm
Quoting Icytrader
can u guys explain why you think this is strength?
If there is a bunch of selling on high volume then that may be that the pros are selling...
O is it that they are the ones buying against the selling? Wouldnt that be 2 expensive for them?
Or is it that high volume broke the resistance?
Im new to vsa so i dont really know.
great thread.
Thx mal
Hi there,

If you're looking into VSA, you really need to read Master the Markets by Tom williams. It has been posted here somewhere. If you look in the attachments in the top right of the thread you should find it.

You'll need to read it cover to cover.....twice! Then things will start to make a LITTLE sense when you read the thread. Its a learning curve I'm afraid.

You really should read the thread from post 1 also, there's so much in here to help you.
  • #1,983
  • Aug 6, 2010 2:43pm Aug 6, 2010 2:43pm
Quoting Icytrader
can u guys explain why you think this is strength?
If there is a bunch of selling on high volume then that may be that the pros are selling...
O is it that they are the ones buying against the selling? Wouldnt that be 2 expensive for them?
Im new to vsa so i dont really know.
Okay... Welcome to the thread.

Whenever you see that price reaches or blows through a certain resistance level, two things can happen:

1) A bounce (false break) - short or
2) A continuation - long

In VSA we look at volume in relation to the size/range/spread of the price bars. The first thing you should ask yourself when you're faced with this scenario is:

I) How did the bar (which broke the level) close?
II) What was the volume on this bar?
II) What was the spread?

Now, if this bar in question breaks a level on high volume it means that there is "activity". We know the smart money is participating in this move. But what we do not know is if they are short or long (1 or 2 above). To find out we look for signs.

If the bar, in addition to its high volume, closes on the highs (like it did on mal's chart) with wide spread (note that some stops also could have been taken out here too) this could be our first sign that it is a push up through supply by the smart money. Now this does not necessarily mean a buy signal on its own, so you don't just jump in long, rather you wait for more signs because we remember that price is at resistance and two things can happen (1 or 2 above).

On your question as to whether it will be to expensive for them. They are well equipped and they can see both sides of the book. They have more money, they move the markets. So if they expect higher prices, that will be the beginning of a new run or it will be to them the cheapest or lowest possible value after examining the market conditions.

Looking For More signs:

The fact that the bar closed at its high with high volume and wide spread and through resistance makes it what we call a push up through supply. But like I mentioned. We want to be sure. So wait to see what happens on the following bars. I will not delve into the others now, read the book "Master The Markets" as it will even explain it in a more detailed fashion. Just wanted to answer your question briefly.

*If the next bar is a down bar (closes lower than open) with narrow spread and low volume we say this is no supply meaning the smart money are absorbing any possible selling because they perceive that level as a new low. There fore they are buying up from the sellers as much as they can.

*If the next bar is a down bar with narrow spread but on high volume it means that the smart money are absorbing the selling. Think about it logically. Why would there be signs of activity on a bar and the bar closed lower than the open but refuses to go down further? We refer to this as bag holding but some people call it a squat.

*If the next bar goes up and comes down to close below the open of the previous bar (engulfing or totally engulfing the prior bar) and with average volume this could be a sign of a reversal meaning it was a false break. We call this a two-bar upthrust but on here we call it KRB (Key Reversal Bar).

*If the next bar goes up or is marked up and closes on its low and on high volume (without necessarily engulfing the prior bar), this is an upthrust still telling you that the smart money may be selling and not buying (meaning a false break. Here they are selling at high prices favorable to them).

In such scenarios as the last two points, you would notice price stall for quite some time because here the herd would be buying and expecting prices to go up. In other words they would be selling or dumping as much as possible to the herd here.

But you must understand that VSA is not all about one bar. Sometimes, depending on the market action or status (e.g if the market is expecting an important news event or if the market is nearing a close e.t.c), you can wait for more bars to show you more signs (also depends too on if you're an aggressive or conservative trader).

If indeed this proves to be a real push up through supply, on Monday we should expect to see bullish volume (i.e as the bars begin to rise, the volume should increase gradually but not excessively).

===
From the chart mal posted, notice the following bars? How they closed in relation to their spread and volume? Check it out.
  • #1,984
  • Aug 6, 2010 3:07pm Aug 6, 2010 3:07pm
es is nuts today .. OB opens his gob and it raises 15 points in 45 minutes , to close just under yesterdays close.

My question is ... in a country of 270 million how do they know 77 k jobs created in private sector ? seems nfp is really just a crap shoot to manipulate the markets for pros to buy or sell on price spikes ... today ES was bought

this is good for gu and eu longs anyway .... as if us markets rise usd gets weaker
Blogging daily now at www.volume.zone
  • #1,985
  • Aug 6, 2010 3:31pm Aug 6, 2010 3:31pm
Quoting malcolmb14
not sure what to think of this

sure seem heavy supply hitting the market

Attachment
At work again

I'm with Wh1zz0 on this one. Looks like it might hold to me.
  • #1,986
  • Edited 3:53pm Aug 6, 2010 3:42pm | Edited 3:53pm
Quoting malcolmb14
es is nuts today .. OB opens his gob and it raises 15 points in 45 minutes , to close just under yesterdays close.

My question is ... in a country of 270 million how do they know 77 k jobs created in private sector ? seems nfp is really just a crap shoot to manipulate the markets for pros to buy or sell on price spikes ... today ES was bought

this is good for gu and eu longs anyway .... as if us markets rise usd gets weaker
From my little knowledge on correlation & fundamentals, we have stocks and we have bonds. Stocks represent the bits of firm(s) invested in while bonds are some sort loan to the government which receive interests. It also refers to a kind of "insured money". I say insured because it is safer to invest in bonds since here you are less likely to lose money than with stocks. With bonds, the interest rate lenders receive by government is highly dependent on inflation (high inflation=higher interest rates, thus lenders receive more on their investment and vice versa).

When stock market rises it usually means that more money is pumped into the stock market while less goes into bonds because at this juncture investors see more value for their investment in stocks rather than bonds. This makes stock market rise and bonds fall. Therefore, US stocks rise, Dollar falls.

I noticed this seriously when all those bailouts were happening and I began to grasp little by little why this was/is so.
  • #1,987
  • Aug 6, 2010 4:32pm Aug 6, 2010 4:32pm
Quoting Intel
Hi there,

If you're looking into VSA, you really need to read Master the Markets by Tom williams. It has been posted here somewhere. If you look in the attachments in the top right of the thread you should find it.

You'll need to read it cover to cover.....twice! Then things will start to make a LITTLE sense when you read the thread. Its a learning curve I'm afraid.

You really should read the thread from post 1 also, there's so much in here to help you.
I have it. Its a great book. Read it non stop for hours and days. Its just that it can be hard to absorb all that and use it in real life scenarios. That book really changed how i see the market. It is a great thing to at last know what moves the market.
Thx a lot for the responses.
What i am actually concerned about is that the real reason of the break could be the NFP report hype and not pro buying. Hope that the outcome of this will be clear enough so that all of us can make money out of it.
Icy trader = cold hearted trades. no emotion whatsoever. Below zero.
  • #1,988
  • Aug 6, 2010 4:41pm Aug 6, 2010 4:41pm
Quoting Icytrader
I have it. Its a great book. Read it non stop for hours and days. Its just that it can be hard to absorb all that and use it in real life scenarios. That book really change how i see the market. It is a great thing to at last know what moves the market.
Thx a lot for the responses.
What i am actually concerned about is that the real reason of the break could be the NFP report hype and not pro support. Hope that the outcome of this will be clear enough so that all of us can make money out of it.

fomc is Tuesday , this will probably set tone for GU for rest of August

This is why i prefer trading a 15 min chart intraday , looking for buys or sells that complete days ranges. All trades closed by NY close (1pm pst) .

do not overhthink things ... 1.5960 is support , look for move off this for longs , price breaks this look for sells on moves up with no demands.

Three vsa set ups :
longs
stopping vol
shake out
tests

sells
buying climax
upthrust
no demand

learn those 6 and they will take you a long way in this market.
Blogging daily now at www.volume.zone
  • #1,989
  • Aug 6, 2010 5:04pm Aug 6, 2010 5:04pm
Yea I do have the problem of overthinking. Thx for simplifing things for me. What do you mean by rest? bear market? One more question.
I know that gj is the most volatile of them all. How have you guys done with gj using the vsa method. Maybe it is the same but you just have to put longer stops. right?
Icy trader = cold hearted trades. no emotion whatsoever. Below zero.
  • #1,990
  • Aug 6, 2010 5:07pm Aug 6, 2010 5:07pm
Quoting Icytrader
Yea I do have the problem of overthinking. Thx for simplifing things for me. One more question.
I know that gj is the most volatile of them all. How have you guys done with gj using the vsa method. Maybe it is the same but you just have to put longer stops. right?
gj the beast

vsa on fx works really well with the majors . It takes a pro to trade vsa and the cross as they are crazy volatile. I used to trade gj but now stick mostly to gu and eu . I mean they both have 140 pip average daily range right now , all i want is 50 pip a day 250 per week 1000 per month . If i can get on both pairs I am happy.
Blogging daily now at www.volume.zone
  • #1,991
  • Aug 6, 2010 5:18pm Aug 6, 2010 5:18pm
Quoting wh1zz0
From my little knowledge on correlation & fundamentals, we have stocks and we have bonds. Stocks represent the bits of firm(s) invested in while bonds are some sort loan to the government which receive interests. It also refers to a kind of "insured money". I say insured because it is safer to invest in bonds since here you are less likely to lose money than with stocks. With bonds, the interest rate lenders receive by government is highly dependent on inflation (high inflation=higher interest rates, thus lenders receive more on their investment...

Hello,

The bond market is much bigger than the stock market and stocks usually trail what the bond market does... but what is happening now? 10 year and 2 year bonds are at historic lows after a double dip... aswell as Baltic dry Index (indicator for shipping freight)... however equities are rising.... is this a setup for a huge freefall in equities?

USD is usually inverse aswell equities rise and USD falls... but the trend is reversed last little while.. confidence is faltering for the USD and more ppl moving to CAD/CHF even maybe even EUR even though that might be people offloading gold.

I personally think the bears are not at play... the closing market tells me so... the volume is just not the same in this trend at the NYSE closing than the downtrend when it would go crazy (HFT's take over and push it in the direction they choose).... perhaps they are waiting for Tues if QE is nto introduced... or maybe they know something we don't and are doing a pump before a dump.

Jag
  • #1,992
  • Aug 6, 2010 5:49pm Aug 6, 2010 5:49pm
glad you mentioned the baltic ... typically a leading index.

I guess eventually the weakness we see in the dj weekly volume will kick in

Quoting sidhujag
Hello,

The bond market is much bigger than the stock market and stocks usually trail what the bond market does... but what is happening now? 10 year and 2 year bonds are at historic lows after a double dip... aswell as Baltic dry Index (indicator for shipping freight)... however equities are rising.... is this a setup for a huge freefall in equities?

USD is usually inverse aswell equities rise and USD falls... but the trend is reversed last little while.. confidence is faltering for the USD and more ppl moving to CAD/CHF even maybe even EUR...
Blogging daily now at www.volume.zone
  • #1,993
  • Aug 7, 2010 2:21am Aug 7, 2010 2:21am
*ponder* so i took a look at the previous vsa thread that got moved to commercial and i what i see 'take these patterns' and less vsa analysis. i say this often, lets give thanks to mal hidden and intel for true vsa intepretation.
  • #1,994
  • Aug 7, 2010 6:56am Aug 7, 2010 6:56am
Quoting malcolmb14
fomc is Tuesday , this will probably set tone for GU for rest of August

This is why i prefer trading a 15 min chart intraday , looking for buys or sells that complete days ranges. All trades closed by NY close (1pm pst) .

do not overhthink things ... 1.5960 is support , look for move off this for longs , price breaks this look for sells on moves up with no demands.

Three vsa set ups :
longs
stopping vol
shake out
tests

sells
buying climax
upthrust
no demand

learn those 6 and they will take you a long way in this market.
Mal

if you can spare the time to dig up an example chart for each of these basic six patterns I think the newbies would be eternally grateful

cheers
f451
  • #1,995
  • Aug 7, 2010 12:33pm Aug 7, 2010 12:33pm
test ....

seems es may have a valid test on Friday , down bar closing in upper portion on low volume.

The immediate knee jerk reaction to nfp may have shoke out some longs in the stock market.

We see 1120 support area , then 1122.75 , then 1129.5

1129.5 broken to upside strong chance for 1150. I attribute the low volume right now in July august due to being summer

Attached Image (click to enlarge)
Click to Enlarge Name: es.jpg Size: 213 KB
Blogging daily now at www.volume.zone
  • #1,996
  • Aug 7, 2010 12:41pm Aug 7, 2010 12:41pm
Mal --whachu think ?
Attached Image (click to enlarge)
Click to Enlarge Name: SP500weekly.png Size: 134 KB
  • #1,997
  • Aug 7, 2010 12:49pm Aug 7, 2010 12:49pm
Quoting taomql4
Mal --whachu think ?

thinking s and p looks weak here with the low volume on up moves BUT this could be just due to July and august low volume months as are typical .

It seems the dip friday was bought heavy into and the knee jerk reaction to NFP -137 k ( all temp jobs) that were lost is not as bad as it seems . It seem we added 77 k private jobs. wow .. awesome ... another 12 years at that rate and we will get back to the employment numbers we saw before 2008

still as far as my math goes ... -137 +77 = 60,000 job lost last month ..wtf does the market have to be happy about lol
Blogging daily now at www.volume.zone
  • #1,998
  • Aug 7, 2010 12:50pm Aug 7, 2010 12:50pm
Stopping volume is another indicator variant that shows when buying is overcoming selling.
A high volume down-move, on a wide spread would normally indicate selling. However, if the next day
(or bar) is up, closing on the high, then this shows that absorption buying occurred on the previous day (or
bar). Only professional money can do this and it is therefore a good indication of strength.

June 8th 60 min chart GU . These are ACTUAL examples of the vsa set up described as noted by tradeguider.

Attached Image (click to enlarge)
Click to Enlarge Name: chart2583.png Size: 205 KB
Blogging daily now at www.volume.zone
  • #1,999
  • Aug 7, 2010 12:53pm Aug 7, 2010 12:53pm
After substantial falls have already taken place (bear market), the market may open with wide spreads
down, on very high volume. There will be panic amongst the herd! However, the next day (or bar) is up.
This action represents a rapid transfer of stock, generated from panic selling to professional money (news
will be doom and gloom to help this transfer of stock). This is known as a selling climax.


Attached Image (click to enlarge)
Click to Enlarge Name: chart2584.png Size: 217 KB
Blogging daily now at www.volume.zone
  • #2,000
  • Aug 7, 2010 12:54pm Aug 7, 2010 12:54pm
Quoting malcolmb14
thinking s and p looks weak here with the low volume on up moves BUT this could be just due to July and august low volume months as are typical .

It seems the dip friday was bought heavy into and the knee jerk reaction to NFP -137 k ( all temp jobs) that were lost is not as bad as it seems . It seem we added 77 k private jobs. wow .. awesome ... another 12 years at that rate and we will get back to the employment numbers we saw before 2008

still as far as my math goes ... -137 +77 = 60,000 job lost last month ..wtf does the market have to...
But everybody knows at some point those census workers have to be let go- so why not focus more on the private sector Job creation ? LOL-You
are right though we really have to get back to 150 K job creation before any one can jump for JOY ..

i don't know !!--You know me , i like to see the DJ / SP 500 fly--lol
so maybe am just looking at what i want to see..!!
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