V.6:2 (67-69): Cumulative Volume and momentum Part 2 by John C. Lawlor

V.6:2 (67-69): Cumulative Volume and momentum Part 2 by John C. Lawlor
Item# \V06\C02\CUMULAT.PDF
$3.95
Availability: In Stock

Product Description

Cumulative Volume and momentum Part 2 by John C. Lawlor

Price is so obvious that we all expect it to tell us everything. For example, if our stock gains $1 on the day, we feel good. However, what we really do is multiply that $1 by, say, the 500 shares we own and, of course, we feel $500 richer. It is truly the number of shares we own that makes us feel good. Volume, then, makes the difference, not just the price or the price change.

Some technical analysts talk erroneously about price momentum. Momentum is defined as "the force of a moving body" or "momentum = mass velocity." Consider a Fiat and a Mack truck moving down the highway at 50 mph. If they strike a stationary object, which will have the greatest effect? Which has the greater momentum due to its greater mass? Which will generate the greater force? If we think about the Chicago Bears' Refrigerator Perry hitting the line at full speed, we really understand momentum.

Thinking about market forces then, volume represents the mass of momentum and is causative of price change. Price is simply a number indicating change alone. Measuring and evaluating volume can reveal and confirm price changes.

In the first installment of this article (Stocks & Commodities, January 1988), I presented charts where Cumulative Volume (CV) was overlaid on price to show the moving relationship of both. In addition, the 200-day moving average of price (200DMA) was placed on the chart to show how it normally is a moving line of resistance or line of support for price. The charts showed only one additional CV characteristic called a channel trend.




FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.




Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order