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SBV
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Selling & Buying Volume (SBV) Indicators:
How to Define Long-Term Trend
Analyze Past
- Chart
selection: Open an SBV chart for the S&P 500 index and select a 3-,
4-, or a 5-year period. The chart has an index pane where you can
determine the magnitude of volume surges. The bottom pane is the SBV pane
- this is where you will determine whether a surge is buying or
selling in nature– as well to establish its duration);
- Locate
an index reversal point: On the chart, locate the last, major,
long-term index reversal point where the index switched trends.
- Locate
large volume surges at the index reversal point: Do you see any VMA
surges with a large magnitude and/or a long duration that are directly
associated with the long-term reversal point you found in step 2?
- Qualify
the volume surge associated with the index reversal (is it buying or
selling?): Buying surges appear during a declining market
whereas selling surges are generated in a rising market. To determine
the nature of a particular volume surge, click on its peak [in the index
pane] and check how it correlates with the SBV oscillator (which is
located in the bottom of the chart). Decide whether the top of the
volume surge lines up with a negative SBV value (green) or a positive SBV
value (red). If the SBV value is green, then you have confirmed a
buying volume surge; conversely, if you see a corresponding red
SBV
value, you have identified a selling volume surge.
- Locate
and qualify the volume surges preceding an index reversal: Now,
locate a volume surge immediately preceding the particular volume surge
and determine whether it is buying or selling? Again,
cross-reference the surge in the index pane with the corresponding SBV
indicator.
- Locate
and qualify the volume surges following an index reversal: Similarly
to step 5 – but now moving forward rather than backward on the chart –
are there any large volume surges that appear after the index has
already made its reversal? Determine whether the volume surge you
selected in step 6 (which appeared after the index had reversed course)
is buying or selling. Proceed in the same fashion as you did
earlier – by looking at both panes on the chart.
- Qualify the magnitude
and duration of the volume surges that appeared before, during, and
after a reversal: Mentally summarize the volume of the same nature
defined in steps 3, 5 and 7.
Compare past with Present
- Do you see
any large magnitude volume surge following an index reversal that are
comparable in magnitude” in duration to the volume surge that was
associated with the index reversal point (see step 3)?
Do you see
multiple large magnitude volume surges following an index reversal that
are lower then volume surge defined in step 3, however in summary could
be comparable?
If you do not see any large volume surges
then the long-term trend more likely continue its movement and there is
no need in further analysis. If you see then go to the next step.
- Are the
large surges defined in the previous step (8) buying or selling? Are they the
same or opposite nature to the surges defined in step 3?
If they are the
same nature (for instance surges defined in steps 3 and 8 are
buying) then the long-term trend more likely continue its movement
and there is no need in further analysis.
If they are opposite nature
(for instance the surges defined in step 3 are buying and surges
defined in step 8 are selling) then go to the next step.
- Is the
accumulation of the volume in these surges larger than the accumulation
that had prompted the index reversal? Make a conclusion based on
following statements:
-
If
any opposing cumulative volume surges are smaller than the initial
volume surges that reversed the prior trend and established the current
trend, the market will likely continue along its new trend;
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If
any opposing cumulative volume surges are roughly equal in size to those
that initiated the current trend, the market may level out and enter a
supportive / resistive corridor;
-
If
the opposing cumulative volume surges outweigh the volume that caused
the initial trend reversal, the market may begin to enter a new opposing
trend.
Next

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