Stock picking using volume price analysis and excellent free resources

Stock picking using volume price analysis and excellent free resources

00:04

Introduction to webinar and volume price analysis

00:04

The webinar begins on time with a welcome to attendees, including those who joined previous sessions. The focus is on stock trading, distinguishing it from investing, and a disclaimer is issued emphasizing the risks involved in trading. Attendees, especially newcomers, are advised never to trade with money they cannot afford to lose.

01:14

The session introduces volume price analysis, highlighting the critical relationship between price action and volume in charts. The key concept is identifying anomalies where price moves are unsupported by adequate volume, indicating non-genuine moves. The presenter references companion books with numerous examples across stocks, commodities, indices, forex, and crypto markets, emphasizing the broad applicability of this methodology.

02:20

Coinbase IPO and volume price patterns

02:20

The speaker discusses the excitement around the Coinbase IPO, noting speculation that Coinbase might have a higher valuation than Goldman Sachs. They mention the usual timing of the IPO launch, around half past 10. The conversation then shifts to technical analysis, specifically volume price action using candle patterns, which are considered very important. The speaker explains the concept of support and resistance lines, highlighting that these can be drawn based on price or volume, including the use of Camarilla levels and volume point of control, which indicate crucial areas on the chart for traders.

03:23

Support and resistance in trading

03:23

The segment explains how traders interpret supply and demand zones, focusing on support and resistance levels where price may either reverse or congest. It highlights the importance of identifying whether the price will break away or reverse at these zones. The discussion then shifts to the challenge of trading stocks in a strong uptrend, especially when a trader has missed both the beginning and middle phases of the trend.

04:27

Understanding trends and volume anomalies

04:27

The speaker discusses the behavior of markets in strong uptrends, emphasizing that while reversals are often anticipated, they do not happen immediately. They explain that traders typically avoid chasing prices during strong trends due to hesitation. The importance of understanding trends, volume, and price analysis is highlighted, with a focus on pullbacks within a primary trend. The current market is noted to be in an uptrend, but the volume supporting this trend is relatively weak across indices, which may not prevent prices from rising but is a key factor to watch for potential reversals.

05:37

The speaker elaborates on the significance of volume in identifying market reversals, pointing out that a reversal typically involves narrow price spreads combined with high volume. Presently, the market is showing good price movement with relatively low volume, which is an anomaly. This condition might allow prices to rise further but could also signal a lack of strong momentum. The distinction between traders and investors is made based on holding periods, with traders focusing on short-term moves while investors consider longer-term trends. Understanding these anomalies is crucial for making informed decisions.

06:42

Using daily charts for a historical perspective, the speaker points out a price action pattern where the market drifts higher while volume declines, indicating the market is ‘running out of steam.’ This pattern is important in recognizing when strong upward movements may be losing momentum. The current price action is examined closely at the detailed level to better understand this phenomenon and its implications for future market behavior.

07:13

Earnings season and market trends

07:13

The discussion focuses on the Dow Jones futures (US 30) and its upward movement during earnings season, which is expected to be strong, especially for banks like Wells Fargo. Banks benefit from rising interest rates because their primary product is debt, which becomes more profitable as borrowing costs increase. The market shows a trend with some congestion, and volume analysis during pullbacks helps determine if the primary trend will continue. Early volume may appear distorted due to the market open, but this will normalize.

08:53

The speaker analyzes different timeframes including five-minute, fifteen-minute, and hourly charts, highlighting key support and resistance levels known as Camarilla levels. The price has broken through significant resistance points, indicating strong upward momentum. The hourly chart shows the price fluctuating between support (S3) and aiming for resistance (R3). A volatility candle has appeared, suggesting a potential slowdown or pause in the momentum.

09:58

Volume beneath the price action supports the momentum seen in shorter timeframes. The dollar-yen currency pair is used as a risk proxy and shows a similar congestion pattern, reinforcing the idea of sideways movement. The key focus remains on the R3 resistance level as a target for further upward movement. Renko charts are introduced as a tool to provide a clearer geometric view of price trends and potential breakout points.

10:38

Renko charts display choppy price action with the trend monitor fluctuating between colors, indicating uncertainty or consolidation. Traders can either wait for a break of congestion or a decisive breakout at resistance levels (R2 or R3) to confirm the trend direction. Renko charts help keep traders positioned during moves and provide clear levels for potential targets.

11:10

Stock selection criteria and fundamentals

11:10

The speaker introduces the topic of stock selection, emphasizing the need to tailor criteria for trading versus investing. They highlight that, similar to the forex program which combines chart analysis, fundamental releases, and market sentiment, stock selection also involves understanding key fundamental metrics. The speaker aims to help narrow down which fundamental metrics are most important for stocks and has prepared free resources for further learning.

12:22

The speaker explains how related markets influence trading decisions, comparing forex currency drivers to stock sectors that perform differently during economic cycles. They mention that technical analysis alone is insufficient; understanding sector strength and economic context helps identify better trading opportunities. A valuable resource on sector analysis is introduced to assist in evaluating whether a stock is a strong candidate or a laggard.

13:52

The speaker plans to deliver this stock selection content in a structured series and encourages viewers to take notes on the resources shared. They will create a portfolio of stocks to analyze throughout the sessions, providing practical examples. One stock highlighted is AHT, which the speaker appreciates due to its recent notable price movement relative to volume point of control, and will demonstrate how to analyze it using various websites.

15:00

Analyzing Ashford Hospitality stock

15:00

The speaker discusses a recent downward price movement highlighted by a large, wide down candle with a significant wick at the bottom and high volume, which stopped at a key volume support level identified by the VP indicator. They emphasize the importance of support and resistance levels, noting how price reactions often occur at these zones. The stock in question is described as remarkably consistent with minimal gaps, making it suitable for volume price analysis (VPA) and showing respect for these technical levels.

16:42

The speaker transitions to David, who greets viewers and apologizes for the previous session’s hectic pace. David introduces a stock chart displayed on multiple time frames, referencing a stock they recently covered earlier in the week. He explains that the analysis approach applies broadly across different markets, including stocks, indices, futures, commodities, and currencies, emphasizing the versatility of the methodology.

17:49

Sector performance and economic cycles

17:49

The speaker explains that trading principles apply universally across different markets and emphasizes the importance of understanding sector performance. They highlight the complexity of sectors, sub-sectors, and their impact on trading strategies, including intraday and long-term investing. The discussion includes how economic cycles influence stock and sector rotations, interest rates, and inflation. A particular stock on the weekly chart is favored due to its clear price action and volume patterns, which are straightforward to analyze compared to more volatile stocks.

19:58

The focus is on analyzing volume and price action anomalies, such as narrow spread candles with exceptionally high volume, which indicate strong buying pressure rather than selling. This buying strength suggests that the stock is unlikely to sell off sharply and may continue its upward trend. The speaker points out repeated buying support shown by wicks on weekly candles, indicating consistent market support despite temporary dips. These volume-price relationships and candle patterns are key in identifying accumulation or distribution phases.

22:11

The presence of repeated lower wick candles confirms ongoing buying support, signaling strength in the market rather than weakness. The speaker compares this to the opposite scenario—upper wick candles—which would indicate selling pressure. The analysis extends to recognizing specific chart shapes and patterns that traders watch for accumulation or distribution signals. The stock’s volume point of control and low volume nodes are noted, and the speaker suggests examining the monthly chart for a longer-term perspective on the stock’s potential.

23:49

Attention shifts to intraday trading, using a trend monitor across multiple time horizons, showing mostly bullish conditions with some sideways movement on shorter time frames. Large volume spikes can distort charts, so the speaker adjusts the view to better assess volume trends. They identify a small price move accompanied by declining volume, indicating waning buying interest and potential congestion or minor selling. This phase is expected as traders take profits, causing temporary pauses or minor reversals. Narrow spread candles with corresponding low volume are considered normal and not anomalous, indicating agreement between price and volume.

26:08

The speaker reiterates the importance of interpreting volume and price action correctly, noting that low volume beneath narrow candles is typical, not anomalous. They anticipate the price attempting to move higher, breaking out from the current congestion zone. The discussion briefly touches on pre-market activity and transitions to reviewing market indices, noting mixed signals with some indices falling and others rallying.

26:37

Market anomalies and index updates

26:37

The speaker discusses how the NQ (Nasdaq) is starting to pull the ES (S&P 500) down, and potentially the YM (Dow Jones) as well, suggesting a possible short opportunity to capitalize on the downside. They mention the earlier strong upward movement to the V-POC (Volume Point of Control) before transitioning to cover various topics, starting with Finviz, which they had been following for several sessions.

27:14

Using Finviz for stock screening

27:14

The speaker initially dismissed Finviz as a useful tool but later found it valuable for analyzing individual stocks after filtering by sector and index. They focus on Ashford Hospitality (ticker HT), noting its dramatic price drop from $140 to around $2, largely due to the pandemic’s severe impact on the hospitality industry. Despite this decline, the stock’s monthly chart shows significant volume support at its current price level.

28:38

The monthly chart indicates a clear downward trend since November 2019, confirmed by a trend monitor. The volume point of control acts as strong support for the stock, attracting notable buying interest. The speaker cautions against assuming the stock is a bargain simply because of its low price, emphasizing the importance of understanding the underlying reasons for such a decline.

29:33

For the stock to return to its previous highs around $140, it would require substantially increased volume. The daily chart highlights a key support level tested multiple times, supported by recent buying activity. The speaker also notes the presence of a large volatility candle, which often creates respected support and resistance levels in the market.

30:36

Massive volatility candles, like the one seen in this stock and previously with GameStop and gold, create significant trading ranges that often persist until a breakout occurs. These volatility-based support and resistance levels are important for day traders to consider when analyzing price action. The speaker plans to cover more on these topics in future webinars.

32:18

The speaker introduces Finviz as a free stock screener tool, which becomes ad-free and more user-friendly upon signup. While it lacks some advanced features in the free version, it is still useful for filtering stocks by various criteria including technicals and fundamentals. The speaker intends to provide an overview of why they chose this stock and how to utilize Finviz effectively.

33:23

Finviz allows users to screen stocks by technical and fundamental metrics or simply input a ticker for a quick stock overview. The speaker highlights the importance of relative volume for day trading, noting that stocks with higher trading volume tend to be more stable. The stock has been moving sideways, recently breaking out of a pennant formation, and is trying to establish a base, aligning with key price points.

34:58

The stock is classified under hospitality and real estate, specifically hotels and motels, sectors hit hard by the pandemic. It has a market cap of approximately $233 million and currently trades around $2.31 with relatively high trading volume. Opinions vary on the minimum volume needed for trading; although low-volume stocks can have big moves, they are riskier and require confidence and fast time frame trading.

36:02

The speaker acknowledges the need to upgrade their Finviz subscription for better data but focuses on relevant metrics for day trading rather than investing fundamentals. For investors, metrics like return on equity, investment, and assets are important. Good fundamentals may indicate a stock suitable for both investing and trading, suggesting a crossover between these approaches.

37:04

Ownership data reveals the stock’s float and the percentage of shares shorted, which is less than 1%. Traders often seek stocks with higher short float for potential short squeezes, as seen in the famous GameStop case. The short ratio and volatility metrics are moderate, making this stock relatively steady for day trading without extreme price exhaustion.

38:40

The speaker focuses on the RSI (Relative Strength Index) as a key technical indicator for stocks, noting differences from forex markets. Stocks generally have a long bias, so RSI overbought levels may not trigger immediate selling like in forex. High RSI in a strong stock can indicate sustained strength rather than impending reversal, requiring a different mindset for stock trading compared to forex’s mean-reverting nature.

40:22

Stocks are generally purchased with the expectation of price appreciation, unlike forex trades which frequently buy and sell. The stock’s RSI is around 35, suggesting potential further downside but recent buying interest could support a rebound. Relative volume is 1.85, indicating slightly higher than average trading activity, which is useful for assessing stock stability and trade potential.

42:02

Recent news shows options traders are anticipating a significant move in Ashford Hospitality, drawing attention to the stock. While the speaker does not analyze the options data in detail due to time constraints, they note the possibility of a short squeeze or other significant price action. They plan to follow this narrative in upcoming sessions.

42:31

The speaker praises Finviz’s reasonably priced subscription and helpful features but emphasizes the importance of understanding which metrics to apply based on trading or investing goals. For investors, some metrics like relative volume may be less relevant. Finally, the speaker introduces a useful website, csimarket.com, for exploring sector data, highlighting the value of sector analysis in stock selection.

43:40

Sector performance tools and heat maps

43:40

The speaker explains that investors want to identify strong sectors and stocks to consider buying, while traders look for both strong and weak sectors to exploit short-term opportunities. They introduce a website called novelinvestor.com, which features an impressive heat map showing S&P 500 sector performance since 2007. This tool helps visualize which sectors have been performing well or poorly over time, providing valuable insights for investment decisions.

44:48

The speaker highlights that the energy sector was the worst performing from 2018 to 2020, suggesting it might be due for a rebound. They praise the creators of the heat map for their effort and emphasize the value of seeing sector performance trends. The technology sector, housing major growth stocks like Apple and Facebook, has consistently been a top performer. This data allows investors to track past winners and potentially anticipate upcoming trends.

45:55

The discussion continues about sector performance, noting healthcare’s mixed results and its position relative to the overall market. The speaker encourages exploration of other sectors like real estate and financials, pointing out that financials are influenced by factors such as interest rates and debt. They acknowledge the challenge of finding a single platform that consolidates all this sector information but recommend using available free tools for initial research.

47:08

The speaker reflects on the lack of a single comprehensive site combining all sector data but notes that professional tools like Bloomberg terminals exist, though they require subscriptions and user effort. They reiterate the usefulness of free resources and express enthusiasm for exploring sector data further using these accessible platforms.

47:48

Financial sector and stock analysis

47:48

The speaker explores the financial sector overview, highlighting the ability to view sub-sector performance over multiple time frames such as year-to-date, 90-day, and 30-day periods. They emphasize that while the tool provides detailed breakdowns, it does not grade or rank performance, so users must analyze the data themselves. The discussion focuses on identifying sectors in an upward trend to consider for further exploration.

49:02

Delving into specific stocks within strong performing sectors, the speaker notes that despite an overall sector uptrend, individual stock performance can vary significantly. Credit Suisse is mentioned as an example of a troubled stock within the financial sector. The speaker discusses using the tool to identify potential long or short trade ideas by examining individual stock trends and recent pullbacks.

50:17

The speaker demonstrates how to analyze a selected stock, Franklin Resources, by switching to candlestick charts and using additional indicators on a trading platform. They highlight the value of combining fundamental data with chart analysis to gain a comprehensive view. The importance of considering earnings season impacts and volume support levels is discussed, alongside the integration of related markets and metrics to inform stock selection.

52:14

Continuing the analysis, the speaker attempts to refine the stock overview using the Finviz tool, focusing on financial asset management stocks. They review key metrics such as volume, ownership, short interest, volatility, and RSI, noting that the stocks are generally positive but not exceptionally strong. The speaker examines chart resistance and support levels and begins to assess news and assets under management related to Franklin Resources.

54:10

The speaker evaluates the trading volume and relative volume for Franklin Resources, observing that relative volume is somewhat low for active trading. They conclude by summarizing the approach to stock selection, which integrates technical analysis (such as volume price analysis), fundamentals, and related market influences like bond markets and commodities. The session ends with an invitation for questions and further discussion.

55:17

Related markets and trading overview

55:17

The speaker discusses related markets such as political options and compares them to the forex program, mentioning plans to formalize these into a program available by the end of the year. The focus then shifts to market activity, highlighting Wyoming’s market dynamics as it attempts to break away from the volume point of control. Despite some weakness, Wyoming is supporting the Nasdaq (NQ), which is slightly bearish, while the S&P 500 (ES) and Dow Jones (YM) are holding up the market and pulling it higher.

56:59

The day has been positive for the Dow (YM), with good trading opportunities in both the mini and big Dow contracts at different dollar values per point. The speaker then briefly checks the overall market and gold prices, noting that the recent rally appeared somewhat weak at that moment.

57:03

Market wrap-up and trading platforms

57:03

The speaker discusses weak volume in an uptrend, suggesting the price likely won’t rise much further and may return to the volume point of control (VPOC). Despite this, the market remains tradable. They highlight gold, silver, and soft commodities, noting a significant volatility-triggered drop in silver followed by a strong reversal, indicating tradable opportunities.

57:58

The price of a stock has risen steadily from 16.40 to 16.50 with calm, tradable price action supported by trend monitoring tools like the VPOC. The price moves quickly through low volume regions, which are expected to offer little resistance, allowing the price to accelerate without pausing.

58:29

From a trading perspective, the path higher looks clear due to minimal volume resistance, and the price is expected to reach 17 per share. Upcoming earnings, possibly on the 22nd or 23rd, are noted as significant events that traders should keep in mind.

59:01

The speaker emphasizes the importance of earnings seasons in options trading, explaining how quarterly earnings cycles create ongoing challenges for timing positions, especially with longer-term monthly options. Earnings are a constant, repetitive influence in the market.

59:29

The session wraps up with thanks to attendees and a reminder that all trading indicators and educational resources are available at anacooling.com and quantumtraining.com. Various platforms are supported, including Ninjatrader, TradingView, and TradeStation, with flexible licensing and upgrades available.

01:00:24

Investing in the full indicator package grants free future updates and new tools, including upcoming TradingView indicators like the matrix, array heat map, and multiple versions of Renko charts. The speaker reassures that transferring indicators between platforms is always free and handled by their team.

01:01:17

The speaker highlights the comprehensive Forex trading program available at quantumtradingeducation.com, which includes a funded account option allowing students to trade without personal risk. The session concludes with thanks and well wishes for the trading day, promising more content next week.

01:01:44

A brief closing, thanks, and farewell to the audience, with a note on seeing them next week.

 

By Anna Coulling – creator of volume price analysis