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1. Ultra High volume on the up bar. Markets do not like Ultra High volume up bars because they can hide selling within them. |
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Well, actually, they can't if you use my up-inside-down volume indicator (or any indicator system that shows both up and down volume). The belief that volume could be hidden (selling on up bars, buying on down bars) originated decades ago, before the advent of the internet and our incredibly sophisticated charting platforms. If you watch both up and down volume progressing on a single bar, you can plainly see when there's "hidden" buying or selling.
Needless to say, the problem with hidden volume still applies to those charts where you can't parse out the types of volume. On Tradestation, daily, weekly, and monthly charts won't allow you to insert up and down volume indicators (maybe other charting platforms are different, I'm not sure), but for intraday trading, hidden volume is a thing of the past.
Tom Williams has correctly pointed out that the exchanges have intentionally dragged their feet on providing accurate volume information for a very good reason--the folks that rule the market don't want you to know what they're doing. As Tom points out, there is no damn good reason why we can't get intraday volume on indexes such as the $SPX in this day of supercomputers, and don't get me started on FOREX. Still, for those of us who wisely trade contracts where you can get intraday volume, the separation of up vs down volume is an added level of information that can unmask the hidden buyers and sellers.
The last time I presented this idea, many pages ago on this thread, my idea received a lukewarm reception to say the least. Before you all go jump down my throat, PLEASE do yourselves a favor and watch the up/down volume for a week or so and see what you think.