Sequiam Biometrics (fka SQUM)

[analystslie]

I do not want to harp on the misleading picture of total volume today and what happened to the stock price at one point but I would like to make a comment on a technical indicator some people may not pay attention to.

What I would like to bring to attention is “On Balance Volume” and I thought I would add a few more comments about it.


Not all indicators are effective when you break from daily charts and day trade. "On Balance Volume" herein referred to as OBV is an indicator that can definitely be applied to day trading. Basically the market is made up of leaders and followers. The leaders (smart money) make an impression on the market with their activity and followers (not so smart money) often find themselves chasing momentum after the move. On balance volume is a tool to help see what the leaders are doing before the market reacts. If the OBV continues to rise and the market is not moving or fading, this divergence can give you a nice entry price before the market reacts to the volume direction.

Many traders use the time and sales to see executions. They often color code the buy and sells so they can observe a flow of red (if defined for sales) to give them an indication of market direction. This is a valid technique but it does not distinguish the size of the executions. This can be misleading. OBV inherently takes the size of all executions into account and presents a more complete picture.

I make this comment as if you look at the individual trades in SQUM today you will notice someone is trying to scare not so smart money out temporarily.

Just my observation.