Last
week end we expected the market to show some strength provided nothing crawls
out of the banking mess. More news
regarding the PNB scam sent the market down. Let us do some bar by bar analysis
for some lessons in VSA. It was on the 6th
we saw the market go down based on news and breaking the previous support to
seek new lows. We saw a wide spread Bar closing at the low. (Bar marked “A”). But the volume was just about average. Clearly
the selling was not huge as indicated by the volume. The weakness was indeed
limited. The next Bar (Marked “B”) was a down Bar closing down and the volume
increased. However the spread was narrow. The increased volume could not push
the index down much. Clearly there was strength in this Bar. This strength
manifested in the next Bar, marked “C”. The Bar “C” was an up Bar closing on the top.
The spread was about average and the volume also just above average. The lower tail of the Bar which was much more
than the body of the Bar indicates that selling was still present. The strength seen in the “C” Bar was mediocre
and almost disappeared in the next Bar. The next Bar (marked “D”) opened above
the previous Bar but closed slightly down. The spread was narrow and the volume
was low. It is difficult to classify such bar as “No Demand” or “No Supply”
bar. This was more of a “disinterest bar”
as neither the buyers nor the sellers showed much interest. But the down side
seems limited. The coming week could see
more lack luster trading days till some real strength comes in.
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