$this->bbcode_second_pass_quote('alokin', 'I') am not an economist - and will never be, so forgive me the stupid question: what represents the ups and downs of the indexes? The volume of stocks traded?
Mickey wrote:
$this->bbcode_second_pass_quote('', 'S')o keep an eye on volume. If it goes up like that but on low/average volume, it is likely a counter trend rally.
PeakOil is You
Holy Cow! The Dow is up almost 300 pts in one day!
Re: Holy Cow! The Dow is up almost 300 pts in one day!
by Micki » Tue 29 Jul 2008, 23:18:10
If the DOW is not an index of volume which is the index of volume then?
It is there....Just that most people just look at the price.
Volume is the number of shares that was traded.
This can be done on sectors, indicies, individual shares etc. as long as you have access to charting that supports it.
Volume is ususally not a very useful indicator but is comes in handy when looking at breakouts and counter trends and possibly exhaustion.
A counter trend rally would occur for instance when share prices have been dropping. New shorts get careful to enter, weak long hands are already out and strong hands have stopped selling. So volume starts to dry up.
Bottom fishers get in and turn up the price. But if there isn't broad support for upswing in prices it will be at relatively low volume. (i.e. as there aren't that many sellers left at that price, it doesn't take much to get the price to jump up, often violently.)
If the upswing or counter trend rally however doesn't generate more volume it is likely that it will stagnate. Previously hesitant longs can get a new chance to offload at better prices and shorts get a new entry position. Result - a dead cat bounce.
Counter trends can be tricky to trade and often do ABC waves (read up on elliott wave). It is sometimes hard to determine if it is setting it self up for new up trend. Volume is one of those easier indicators to follow. But do a bit more homework if you intend to trade it as volme is just one indicator of many.
What was said about counter trends also works in the reverse.
i.e. counter trends happen both in up and down markets in similar ways.
- Micki
Re: Holy Cow! The Dow is up almost 300 pts in one day!
by DantesPeak » Tue 29 Jul 2008, 23:28:50
Being that the SEC has implemented new rules making it difficult to short sell a stock, counter-trend rallies will probably more powerful. But the sell-offs will also be faster too.
Obviously the SEC is very afraid, and for good reason, that financial stocks will drop. Financials have to raise capital (issue new shares). The further their stocks drop, the more shares have to be issued.
In addition, companies such as Merrill, WaMu, have anti-dillution agreements which will cause them to pay out huge sums if their stock drops and they have to issue more shares at lower prices.
$this->bbcode_second_pass_quote('', 'S')EC Extends Emergency Short-Sale Order Thru August 12
July 29, 2008: 10:10 PM EST
WASHINGTON -(Dow Jones)- Emergency restrictions on short-sales in 17 Wall Street firms and housing-finance giants Fannie Mae (FNM) and Freddie Mac (FRE), due to expire just before midnight Tuesday, have been extended through August 12, the Securities and Exchange Commission announced.
The SEC said the additional 10-day extension will give its staff time to collect and analyze data on the impact and effect of the order. It said it would move "immediately" afterward to consider rules imposing short-sale restrictions on the broader market.
The SEC issued the emergency order on July 15, citing concerns that rumor- mongering could spark "sudden and excessive fluctuations" in stock prices and disrupt the fair and orderly functioning of U.S. markets.
The SEC said once the order expires on August 12, it "will not be further extended."
If regulators want to continue the short-selling restrictions for the stocks, they would need to do so through rulemaking. The lengthy federal rulemaking process could be accelerated by issuing interim final rules that are effective immediately but still subject to public comment and possible revisions in the future.
Expanding the restrictions to other stocks could be next.
Obviously the SEC is very afraid, and for good reason, that financial stocks will drop. Financials have to raise capital (issue new shares). The further their stocks drop, the more shares have to be issued.
In addition, companies such as Merrill, WaMu, have anti-dillution agreements which will cause them to pay out huge sums if their stock drops and they have to issue more shares at lower prices.
$this->bbcode_second_pass_quote('', 'S')EC Extends Emergency Short-Sale Order Thru August 12
July 29, 2008: 10:10 PM EST
WASHINGTON -(Dow Jones)- Emergency restrictions on short-sales in 17 Wall Street firms and housing-finance giants Fannie Mae (FNM) and Freddie Mac (FRE), due to expire just before midnight Tuesday, have been extended through August 12, the Securities and Exchange Commission announced.
The SEC said the additional 10-day extension will give its staff time to collect and analyze data on the impact and effect of the order. It said it would move "immediately" afterward to consider rules imposing short-sale restrictions on the broader market.
The SEC issued the emergency order on July 15, citing concerns that rumor- mongering could spark "sudden and excessive fluctuations" in stock prices and disrupt the fair and orderly functioning of U.S. markets.
The SEC said once the order expires on August 12, it "will not be further extended."
If regulators want to continue the short-selling restrictions for the stocks, they would need to do so through rulemaking. The lengthy federal rulemaking process could be accelerated by issuing interim final rules that are effective immediately but still subject to public comment and possible revisions in the future.
Expanding the restrictions to other stocks could be next.
CNN/Dow Jones
It's already over, now it's just a matter of adjusting.
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Re: Holy Cow! The Dow is up almost 300 pts in one day!
by Farmboy » Wed 30 Jul 2008, 01:41:30
Holy Cow? 300 points is what? 2% of the Dow. Big woop. Its meaningless. The trend is down especially measured in Euros or gold.
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Re: Holy Cow! The Dow is up almost 300 pts in one day!
by Peleg » Wed 30 Jul 2008, 02:11:47
nikola,
volume is often seen as an indicator of major turning points in a stocks price. It is only loosely correlated though because you have to decide what the percentage signal should be and on what time scale.
I agree with whoever said that technical strategies can influence the market. Suppose we have 50/50 split fundamentalist and technicrats. The fundies stay on the sidelines, but hey there is still half the market knowing that a run is a run is a run. Once the stock starts gaining steam everyone wants in. You could even play round robin. Everyone jumps on the slighest good news in tech to rally 5% out of some tech stocks. The next day it is off to the commodities trough. The day after that Pepsi get's a bump, then some airline stock. The volatility in the market place is where people make money in all seasons.
There are alot of companies now working on automated trading schemes. The EMT says such schemes cannot work in general since the market is like a hive mind already knowing the best price for a stock. But then that does not explain volatility at every scale (fractal like patterns.) There are things the market does not know, in fact it might not know itself well enough to stop it's own jitters.
If they can get things back up to 13,500 without cooking the books then mayb we are starting to feel better. Right now there are going to be ups and downs, but the trend is down and the trend is being dragged down by fundamentals. Technicrats just watch that trend and piggy back on it, perhaps try to enhance it to their favor, etc.
I personally think that a small trader who knows how to hedge well is almost always in a good position. Because the major market moves are always beyond their control and their presence in any run up or drop is barely noticed. This puts the really talented one's almost in the position of empirical scientists. Everyday that the market still creates transactions is an opportunity to make money.
No, I have often wondered how exactly the Fed reconciles capital gains that are extracted from volatility, because it is sort of like a way to force extra cash into the market. I guess in the big the up and down probably washes out. Bubbles and bursts however would not follow that rule and should therefore interfere with monetary policy. I would think.
The Dow is happy right where it is. I look to later in the month or early September for the next semi-major dose of downward medicine.
Cheers
volume is often seen as an indicator of major turning points in a stocks price. It is only loosely correlated though because you have to decide what the percentage signal should be and on what time scale.
I agree with whoever said that technical strategies can influence the market. Suppose we have 50/50 split fundamentalist and technicrats. The fundies stay on the sidelines, but hey there is still half the market knowing that a run is a run is a run. Once the stock starts gaining steam everyone wants in. You could even play round robin. Everyone jumps on the slighest good news in tech to rally 5% out of some tech stocks. The next day it is off to the commodities trough. The day after that Pepsi get's a bump, then some airline stock. The volatility in the market place is where people make money in all seasons.
There are alot of companies now working on automated trading schemes. The EMT says such schemes cannot work in general since the market is like a hive mind already knowing the best price for a stock. But then that does not explain volatility at every scale (fractal like patterns.) There are things the market does not know, in fact it might not know itself well enough to stop it's own jitters.
If they can get things back up to 13,500 without cooking the books then mayb we are starting to feel better. Right now there are going to be ups and downs, but the trend is down and the trend is being dragged down by fundamentals. Technicrats just watch that trend and piggy back on it, perhaps try to enhance it to their favor, etc.
I personally think that a small trader who knows how to hedge well is almost always in a good position. Because the major market moves are always beyond their control and their presence in any run up or drop is barely noticed. This puts the really talented one's almost in the position of empirical scientists. Everyday that the market still creates transactions is an opportunity to make money.
No, I have often wondered how exactly the Fed reconciles capital gains that are extracted from volatility, because it is sort of like a way to force extra cash into the market. I guess in the big the up and down probably washes out. Bubbles and bursts however would not follow that rule and should therefore interfere with monetary policy. I would think.
The Dow is happy right where it is. I look to later in the month or early September for the next semi-major dose of downward medicine.
Cheers
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Peleg - Lignite
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Re: Holy Cow! The Dow is up almost 300 pts in one day!
by cube » Wed 30 Jul 2008, 07:19:48
$this->bbcode_second_pass_quote('r101958', 'I') watch the markets daily....probably too much.
In that case you must of noticed the 3,000 point drop in the dow for the last 9 months? 
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