Volume Always Precedes Price
Tom Aspray
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This statement is one of the cardinal beliefs held by most technicians. It first came to my attention in the late 1970s when I read Joe Granville’s book New Strategy of Daily Stock Market Timing for Maximum Profit, where he wrote “stocks do not rise in price unless demand exceeds supply. Demand is measured in volume and thus volume must precede price.”
In the early stages of my career, I did extensive testing of this concept and developed my own methods of interpreting the on-balance volume. It is the volume indicator in which I have the most confidence. Over the years, I have explored the OBV in more detail and last year discussed multiple time frame analysis of the OBV in The Best Volume Indicator.
In that article, I discussed the long-term bottoming and topping formations in the OBV and why the relationship of the OBV to its 21-period weighted moving average can be so important. I touched on the bullish and bearish setups that I have often observed with the OBV, which is the focus of this week’s trading lesson.
Catching a major low in a stock or ETF is often difficult given the huge number of issues that are traded. I feel that tops are identified more frequently as after a long rally phase, a stock is often watched more closely. Therefore, changes in the volume and price patterns are noticed by more analysts.
FFS…… your manual is not the way to make money in the market.
On the NWBO and AMRN board you are batting way below 500 but given time you like almost all day traders bat 500….. given that you make as much as you lose like 99% of traders using TA are losers.
I don’t use your little anecdotal advice to make money.
I only buy and hold the vast majority of the time ….. have you ever held a stock 10, 20, 30 , 40 years.
You have any clue how much I lost in GM, X, BS, IBM?
You know how much I made buying MSFT after the 2nd split?
Any idea how much I lost in S, KM, JCP, Woolworth?
You have any clue how many shares of AMZN I bought in 2001?
You know how many TA said over and over AMZN was overbought. All the idiots just could not believe the rally.
I’ve lost million(s) alone in AMRN I now have a huge position.. this stock will rally.
Please do not use your TA manual you share with another 50K people to tell people how to trade.
Can you point us to one article you have written on anything to do with your knowledge of volume, of course you can’t everything you know comes from a 25 dollar manual and a 75 subscription a month to a charting service that another 100k people have.
Marzan pointed how NWBO had broken out on the AMRN board 6 weeks ago only problem it was on below avg volume since has fallen flat on its face….. did not stop him from pushing the stock.
Price alone can lead a stock higher ( AMEN) but not for a sustained rally….it will retreat….. stocks have sustainable rallies when institutions come in and buy heavily cleaning up all the loose stock…. Same as a decline in a stock.
Several months ago in July you were pounding the table on what a broken stock AMRN was and it was heading to new lows… obviously you wrong and I pointed that out at the time…. Volume was extremely low compared to the previous visit below 4 and it was never ever going to a new low then….
Your just as likely to say AMRN going down or up on any given day….. holding AMRN and not stupidly trying to time the stocks movement is by far the best strategy.
I wish you were not bullish all you do is JINX the stock.
