S&P 500:
Examples of a Short-Term Trades
We define a “short-term” trend as a general market trend that usually lasts
from a few hours to several days.
The following example illustrates the basic principles behind
MarketVolume®’s analysis.
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Chart 1. Relationship between surges in the volume moving
average (VMA) and index reversal points. NASDAQ 100 index. March
21, 2006. |
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Above, you can see the short-term relationship
between price (i.e., index level) and volume. An increase in volume subsequently
affects the movement of price, causing the index to change direction. You can
see that when the Volume Moving Average surges, the index reacts. With this
knowledge, you can trade confidently and profitably. Index values will always (sometimes immediately,
sometimes with a delay) react to volume surges, and the greater the magnitude of
a surge (or series of surges), the stronger the ensuing reaction.
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Index |
Trades based on selling and
buying volume |
Extent of Trend
Reversal |
| NASDAQ 100 |
Buy on March 22, 2006 and sell
on March 30, 2006 |
2.5% up |
| NASDAQ 100 |
Sell short on April 4, 2006
and sell on April 17, 2006 |
2.8% down |
| Disclaimer: The chart
example is intended for educational purposes only – it does not
constitute trading advice, nor does it make or imply any market trend
predictions. |
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