Tuesday, July 04, 2017

AAPL | Volume Shelves

I've always believed that volume matters though I see plenty of folks who claim to have workable methods that don't rely on volume.  That's well and good.  Many ways to take money out of or put money into the market.

I'm in the volume matters category, particularly in looking at Volume@Price.  I wanted to give you a couple of time frame example, a 2 hour and a daily chart of  Apple, Inc. (AAPL) chart. (Click to make larger).

Below is the 2 hour chart of AAPL.The rectangular section in melon shows the volume gap on this 2 hour chart. You can see how precipitously price fell through that area. 

AAPL Volume @ Price | 2 hour chart

Volume@price are profiled differently for different time periods. It pays to take a broad view and look at a longer termed chart.  Below is a daily chart. Watching how price reacts to the longer time frames is constructive.  Let's take a look at the chart:

AAPL Volume @ Price | Daily
As you can see, as we zoomout from a 2 hour to daily chart show further areas that bear watching.  The area from $137.5 - $142.5 is vulnerable if willing buyers don't step in.

  Absent sufficient buyers, the price offered will have to decline and there is no real support in the melon-shaded area. Remember that for every price on a chart there is a willing buyer and seller completing a transactions.  However without sufficient sellers for eager buyers--prices go up; further, without sufficient buyers for eager sellers, price goes down.  I think that it is safe to say that watching what happens to price here is key

It's the longer term players, not traders, that move stock prices over longer periods.  They have to build positions over weeks and months.  Similarly, they have to unload positions over weeks and months.  These longer time frames help keep the price from moving up too quickly in accumulation or down too quickly in distribution.  Here's a chart of the number of Institutions, accumulated holdings (as of 03/31/2017), and portfolio rank.

What this tells us is that as of the 03/31/2017 reporting period, 1,238 institutions held AAPL as a top 10 position with more than half of that group weighted as #1.
Conclusion:  Volume@Price provides an objective, historical record of the volume of stock transactions have taken place at particular price points. Buyers late in the cycle have purchased at marked up prices and get caught on these ledges and jump when price moves against them.  Buyers early in the cycle are buying at discounts.  Once price has appreciated, the marked up price is sold.  Where we are in this cycle is where these Volume@Price ledges tell us. Gaps above provide opportunities.  Gaps below provide warning. Consider adding this indicator to your evaluative techniques.