Thursday, February 21, 2013 7:37:49 PM
CHARTING 101
Why you can't trust charts in the grays (or - why do people paint the tape)?
Looking at the chart below with an accumulation/distribution line, you can see that the line is moving upward while the pps continues to slide down. This gives the impression that there is accumulation occuring. This is simply not the case. THERE IS NO ACCUMULATION TAKING PLACE! The accumulation/distribution line is basically determined by where the closing price is in relation to the range that the stock trades in each day. If the close is in the upper part of the days range the acc/dis line increases (goes up), if in the lower part of the range then it decreases (goes down). When you look at this chart and compare it to the trades, its easy to see that it opens every day near the close from the day before, then nosedives for most of the day (evident by the long lower candle tail) and then someone paints the tape to bring it back near the open price. Because the close is neart the top of the range for the day, the acc/dis line goes up. This is manipulation of the chart and just one example of why you don't trust a chart in the grays. Understand your indicators and what they are telling you in relation to the arena you're in.
Why you can't trust charts in the grays (or - why do people paint the tape)?
Looking at the chart below with an accumulation/distribution line, you can see that the line is moving upward while the pps continues to slide down. This gives the impression that there is accumulation occuring. This is simply not the case. THERE IS NO ACCUMULATION TAKING PLACE! The accumulation/distribution line is basically determined by where the closing price is in relation to the range that the stock trades in each day. If the close is in the upper part of the days range the acc/dis line increases (goes up), if in the lower part of the range then it decreases (goes down). When you look at this chart and compare it to the trades, its easy to see that it opens every day near the close from the day before, then nosedives for most of the day (evident by the long lower candle tail) and then someone paints the tape to bring it back near the open price. Because the close is neart the top of the range for the day, the acc/dis line goes up. This is manipulation of the chart and just one example of why you don't trust a chart in the grays. Understand your indicators and what they are telling you in relation to the arena you're in.
For more chart plays, click the link below
My CHART PLAYS
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
