Volume Speaking Volumes
Volume and pace have been
rather light on this Monday morning, yet
the hourly Q downtrend support which kicked in on Friday did provide a nice
pullback entry good for a $0.50 to $$0.70 trend-continuation opportunity. I
would expect opportunities to be on the lighter side today as traders position
ahead of tomorrow’s FOMC meeting, and while potential exists on the longer-term
charts for a further retracement, we’ll let the hourly and 13-minute trends and
trend support angles continue to guide us, which they’ve done nicely so far
today.
Monday December
10, 2001Â 12:00 PM EDT
(1)
Approx. Equivalent QQQ Price
The mailbag
continues to overflow at this end. Please be assured that I read and respond to
every one, although it may sometimes take a few days to reply when the volume
piles up. I take all of the comments and feedback seriously, which have helped
to mold the content of both the column and the recently
released video. Here are a few snippets from this weekend’s batch:
“Don, I recently bought your video presentation and have enjoyed it.
It was really helpful seeing ‘real’ trading and not some great successes just to
make your method look easy and successful.” J.T.
“I wanted to thank you for putting together such a great video course. I
have learned a lot from it, and my trading is improving.” M.B.
“Don, I really enjoy your columns … your ‘no BS’ style is very much
appreciated.” B.B.
As it’s been almost six months since we
began our collective QQQ journey at TradingMarkets.com, I spent part of this
past weekend trying to put my finger on why the column and video have generated
such a high level of interest — which has far surpassed my expectations. In
fact, if you had told me a year ago that someone would be doing a daily column
on a tracking fund, I would have handed you the keys to the nearby rubber room,
and if you had suggested that any interest would accelerate in the context of a
rabid bear market, I would have lost all hope for you.
Yet there is no doubt that the explosion in Q volume over the past year explains
part of the growing interest. Indeed, the following volume charts show a
noticeable disparity between volume changes in key individual Nasdaq equities —
which comprise a good portion of the Qs — and the QQQ itself:
And while part of
the Q volume surge likely reflects (1) incremental volume to the Nasdaq market
in general and (2) decreasing market prices which can artificially stimulate
volume, comparing relative volumes of the fourth quarter of 2000 to the same
period in 2001 shows marked divergence in Q volume growth vs. that of the
underlying equities. In fact, the same is true for every quarter, and volume for
some equities, such as
(
MSFT |
Quote |
Chart |
News |
PowerRating), which comprises the largest Q component,
show noticeable decreases
while the Qs have been exploding — even during a bear market.
With respect to interest in the column which I can only measure by my inability
to always keep up with e-mails, it’s been a pleasure to share my corny
analogies, personal approaches, and common challenges with you over these last
six months. This business constantly challenges all
of us daily, and the market will immediately humble us if even the smallest
amount of ego creeps into one’s trading (or commentary). Like you, I have no
clue as to where the market will be six months, six days or six minutes from
now. Thankfully, we don’t need to know, as pattern recognition, probability and
respect for the market over our own beliefs can help guide us.
Good trading.