Case Study : DSEGEN INDEX

Today's volume is still low but the index point is up. Why? To find out the answer, we need to look at the minute chart first.

As per the chart, we see that index goes up with high volume and index goes down with low volume. Because of this price volume action, we have seen a positive market.


"Your money, Your decision". No need to follow others advise specially in share market.
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Please note that this analysis/chart does not mean that (1) I'm holding this share, (2) I've an intention to buy it, (3) I'm suggesting you to buy it. All these are for our learning purpose. by JC

Relation of Price and Volume : Part 5

Price fall with low volume: Sometimes we see in our DSE that price is falling with low volume. If we look at the price chart we find several Lower Lows (LL) have been formed. (to know the Lower Low (LL), pls. click on the chart).

What is the reason? I think, most of the investors are staying on the sidelines with cash, and at the same time, the stock is lack of good news to stimulate the price.

What should we do now? Will we catch the share because of its low price? NO, NO, NO. We should not catch a falling knife. It is best to avoid this share and wait for a reversal. by JC

Relation of Price and Volume : Part 4

 

Price goes up with large volume : When price goes up with large volume, we theoretically say that there are increased of new buyers (greed) to replace the old sellers (fear).  Not only that, most of the time these new buyers are paying a higher price to buy this share and the old sellers are asking for more premium to sell that share. This is a good sign, especially for breakout of resistance. by JC

Relation of Price and Volume : Part 3

Price fall with strong volume : When the market is hit by major negative news, price fall with strong volume, generally we call it Panic Selling (We already saw it 2-3 times in January, 2011 in our market, DSE). In this situation seller are so afraid that s/he don't mind selling their stocks at lower price.   These panic selling activities are usually short-term, but they will certain have an impact to the stock trend and investors confidence.

Finally, at least 3 precondition required to say Panic Selling : 1) Market needs to hit by major negative news, 2) Huge price fall and 3) Large volume.

If anybody tells you that panic sell has been started, I hope, you will test the news by the above 3 condition. by JC

Relation of Price and Volume : Part 2

Price stopped rising but volume remain strong : Bhaiya(s) and Aapu(s), Salam. Have you ever seen in our market that after a bull run, price stopped rising but the volume remain strong. Can't remember?

Okey, we need not to go faraway. Just watch the recent bull run. I've uploaded a chart of our DSEGEN INDEX. Pls. watch it first. Just watch the price and volume action from July 24, 2011 to July 28, 2011 (I've marked it). Average volume was more than 1700 crore per day!!!

Now, try to realize what happened in those days? I know, you already understood it. The strong hand offloaded the shares to the week hand. by JC

Price-Volume Action : Introduction : Part 1

Bhaiya(s) and Aapu(s): Asa kori Allah-r rahamotey valo achen? I hope, you've read my previous series of writing regarding Stop-loss. Now, I’ll discuss the RELATION OF PRICE AND VOLUME which is the most important part of chart reading. I’ll try to keep my discussion as short as possible. Because readers are not willing to read big post.

I know, you know very well regarding the Price and Volume. So, I’m not going to give any definition of price and volume. Tarpor-o nijeder-k ektu zaliye nei, ektu vinno vabey. It will also help us to read chart. If SELLER wishes to sell his share, there must be an equal amount of shares which the opposite BUYER is willing to buy, and then only the seller can off load his shares. Basically, volume is a record of the frequency of shares changing ownership. If today’s volume is 50,000 shares, it means there were 50,000 shares were sold to new owner.

What is the intension of Buyers and Sellers? I know, you know the answer very well. Because, sometimes you are a buyer and sometimes you are a seller. Tarpor-o ektu dekhey nei. When a seller sells a share, s/he thought that the price may not go further up and may fall any time. That is why, s/he sells the share. On the contrary, when a buyer buys that share, s/he thought that the price of the share may go up and s/he is able to take risk at certain level.

Amar pachal sesh. One by one, In Shaa Allah, tomorrow we will discuss the Relation of Price and Volume with chart. Sekhaney kono pachal thakbey na. Granted!!! Allah Hafiz. by JC