1st let me say that Tom Williams' original book, 'The Undeclared Secrets That Drive the Stock Market' seems to be based on sound principles; however, there are issues with some explanations and their videos have problems.
1. In one video, Gavin Holmes displays a 4 hour chart of AAPL. He states in the video that it creates 2 bars per day. That is nonsense. The market is open 6-1/2 hours per day, if you start the 1st 4 hour bar when the market opens and end the last bar at the end of the day (the traditional approach), you will get 4 hours worth of data on the 1st bar and 2-1/2 hours worth of data on the second bar. If you want 2 bars per day, you have to put 3-1/4 hours worth of data on each bar.
Gavin's actual chart was even worse than that, there were 3 bars per day. He started the 1st 4 hour bar 3-1/2 hours before the market opened so the 1st bar had 1/2 hour of data, the 2nd bar had 4 hours of data and the 3rd bar had 2 hours of data. If you compare the volume for these bars you are comparing apples to oranges because all the bars do not contain the same amount of data.
If he put up a chart with 3 minute bars, 5 minute bars and 9 minute bars mixed together, he would be laughed out of the business. What he is doing with the AAPL chart is mixing 1/2 hour bars, 4 hour bars and 2 hour bars on the same chart but he is so clueless he calls them all 4 hours bars and doesn't realize he is doing anything wrong!
If these guys cannot even display data correctly on a chart, you have to wonder how useful their software is and how credible anything they say is.
2. They put too much emphasis on individual bars. If the Professionals test for supply, how and why would they make the test fit neatly into one bar? The answer is they wouldn't. The test may last for only a portion of a bar, it might fit on 1 bar or it might span several bars. They will vary how they execute the test to disguise what they are up to.
3. The TG guys put too much emphasis on the close. There is some justification for that on daily bars because the market actually does close and there is unique behavior associated with that; however, on intraday charts, the close is just the last price for the bar and if you look at different data feeds, the intraday closes are different.
3a. The speakers in their videos consider a bar to be an up bar if the close is even 1 tic higher than the previous bar. That is ridiculous. There is enough noise in the market that very small differences in closes are random.
4. Their explanations in some cases are incomplete. For example, nowhere is it explained why a No Demand bar has to close higher than the previous bar's close. When testing for Demand, Smart Money rapidly marks prices up to draw out any buyers. If no buyers come in, i.e., No Demand, it is by no means obvious why price then has to remain above the previous bar's close.
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05-24-2011, 09:24 AM
. If you think things are bad now they where absolutely hilarious in the early days of TG. 
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