Trading stocks and futures in the US session using volume price analysis

Trading stocks and futures in the US session using volume price analysis

00:08

Introduction and webinar issues

00:08

The session begins with a warm welcome from the host, who notes that it is evening in Hampshire. They thank the attendees for joining and apologize for technical difficulties with their usual webinar platform, which prevented both the host and a colleague from logging in. Despite these issues, the host expresses eagerness to proceed with the session.

00:44

Trading disclaimer and market overview

00:44

The speaker begins with a disclaimer about the risks of trading and advises not to use money that cannot be afforded to lose. The focus will be on U.S. markets, including stocks, commodities, and bonds, along with fundamental and sentiment analysis. Forex will not be covered in detail today, except for brief mentions of currencies like the US dollar and Japanese yen. The speaker also mentions using Investing.com as a valuable free resource for live market data and charts.

01:52

Discussion shifts to current market conditions, noting that the Dow is down but attempting to recover, and the S&P 500 is only slightly down. The VIX volatility index is surprisingly low given the market losses, which typically would indicate more market trouble if it were higher. The Nasdaq is noted as the only major index currently positive. The segment ends with mention of a tweet analyzing the Nasdaq chart patterns, debating whether it is forming a double top or starting a breakout.

03:27

Seasonality and upcoming Fed meeting

03:27

The speaker discusses the seasonality effect on the markets during the late November to Christmas period, traditionally known as Santa’s rally, where markets tend to stay positive despite underlying issues. They mention an upcoming Federal Reserve meeting in December and recall a dramatic market sell-off in 2018 caused by interest rate hikes, highlighting that markets typically decline sharply when cheap money is no longer available, whereas currently money remains inexpensive.

04:41

Central banks are considering very small interest rate increases due to high inflation levels not seen in nearly a decade. The inflation is driven by rising costs of energy, fuel, and goods, compounded by supply chain problems and pent-up demand from pandemic lockdowns, with government financial support fueling spending. This complex mix of factors is causing inflation to rise, affecting economies in the UK, Europe, and the US.

05:54

Inflation trends could shift towards deflation in the future, but currently inflation is rising globally, prompting central banks to respond to immediate conditions. Despite inflation concerns, the market benefits from seasonal optimism as the year-end approaches. There is uncertainty about whether the Federal Reserve will raise interest rates this year, as rate hikes keep being postponed. This postponement supports market positivity and encourages buying opportunities during corrections.

07:02

The past 18 months have been unusual, with ongoing commentary from Federal Reserve members creating an uncertain backdrop. Most major earnings reports are completed, leaving the market to focus on upcoming events like Thanksgiving, Black Friday, and the holiday season. The speaker notes the anticipation of the Fed meeting, possibly scheduled near Christmas, as a key event to watch moving forward.

08:00

Stock filtering using Finviz and Stock Beep

08:00

The speaker introduces a stock filtering approach using Finviz and StockBeep to identify trading opportunities. They explain their criteria, focusing on stocks trading over a million shares with a relative volume of 1.5 or higher, indicating increased market activity. The speaker highlights Finviz’s helpful feature that explains unfamiliar terms, such as relative volume, which compares current trading volume to the three-month average.

09:47

Liquidity considerations are discussed, emphasizing that while liquidity is less of a concern in the current bullish market, it becomes crucial when the market shifts. The speaker contrasts highly liquid stocks like Apple with newer, low-liquidity stocks that can be more volatile and harder to exit without price impact. They then mention revisiting a previously discussed hammer candlestick pattern, noting its occasional reliability with an example from Butterfly Network.

10:54

The speaker examines stocks in the consumer cyclical sector, particularly auto manufacturers and parts, noting an unusual surge in trading volume. Examples like LCID and RMO show extraordinary volume spikes, prompting curiosity and the need for further research into these companies and the sector’s dynamics. The speaker encourages using tools like Finviz to analyze chart patterns, volume, and sector trends to uncover potential opportunities.

12:55

The speaker addresses a viewer’s question about applying Volume Price Analysis (VPA) from a book, advising that the next step is to study charts closely. They emphasize the importance of support and resistance indicators in VPA to identify trading signals and setups. The process of chart analysis, with or without indicators, is critical to effectively using VPA techniques.

13:32

Volume Price Analysis (VPA) basics

13:32

The speaker discusses the process of absorbing trading methodology, focusing on the relationship between candlestick patterns and volume. They mention using Finviz and StockBeep tools for identifying unusual volume and highlight the challenge of stock selection and timing trades before explosive moves. The upcoming stock program will emphasize chart patterns like saucer and hammer candles, aiming to help traders identify promising stocks early.

15:20

The discussion moves to volume price analysis (VPA), especially regarding gaps in stock markets, which are more frequent than in forex. The speaker notes that gaps can be traps but can be used advantageously by interpreting volume signals. They mention ongoing research and resource gathering for the program, including both free and subscription-based tools.

17:13

The speaker reviews the composition and weightings of major indices like the Nasdaq 100, emphasizing that a small number of large-cap stocks such as Microsoft, Apple, and Google dominate the index, comprising around 50% of its weighting. This concentration means index movements are heavily influenced by these few stocks, which is considered unhealthy for market stability and poses risks if any face negative events.

19:48

Further analysis of index concentration is given, noting that similar patterns exist in the Dow Jones, which is more value-oriented but still heavily weighted towards a few large companies. The speaker highlights the importance of monitoring these key stocks as they drive market performance, with significant returns coming from growth stocks like Nvidia and Moderna. The data source mentioned is the free site Slick Charts.

22:12

The speaker expresses concern about the market’s reliance on a small number of stocks for overall growth, suggesting this concentration is risky. They note that although index funds are popular, this uneven growth among components may not be healthy for long-term stability. The conversation hints at further exploration of these issues in the program.

23:26

The focus shifts to practical volume price analysis on a stock called Butterfly Network using five-minute charts. The speaker explains how to interpret volume in relation to price action to confirm genuine moves versus traps. They emphasize looking at candle spreads, volume changes, and benchmarking current price action against previous patterns to identify strength or weakness in the trend.

25:27

The speaker continues analyzing the Butterfly chart, illustrating how volume and candle spreads help identify anomalies and potential reversals. They describe a typical pattern of congestion followed by a waterfall decline with rising volume, then a gap down with a strong wick and high volume indicating buying support. The importance of agreement between price action and volume is stressed to avoid false signals.

27:10

The speaker elaborates on interpreting hammer candles with volume confirmation, noting that a hammer without volume is less reliable. They highlight Butterfly’s recent price action as an example of a valid signal supported by volume. The discussion closes by briefly mentioning another stock, Home Depot, showing a similar pattern of congestion and volume bursts, and referencing improvements to a tick speed indicator used in analysis.

29:20

Support and resistance with volume indicators

29:20

The speaker introduces a new version of a charting tool focused on volume price analysis (VPA), emphasizing the importance of support and resistance levels. They explain their custom accumulation and distribution indicator, which visually thickens lines each time a support or resistance level is touched, indicating the strength of that level. The discussion highlights how this tool aids in identifying strong price action areas within channels, supported by buying activity and volume patterns.

31:06

The segment explains how volume-based support and resistance levels are derived from the volume point of control (VPOC), which acts as a fulcrum representing transacted volume at specific price levels. High volume nodes indicate dense trading areas that are harder to break through. An example shows price testing resistance with rising volume, interacting with indicators like camarilla levels, and how these volume patterns influence price movement and congestion.

33:20

Using Tesla’s chart as an example, the speaker demonstrates how the VPOC serves as a significant support or resistance area where price tends to consolidate before breaking out. They note the psychological impact of round numbers on trader behavior, influencing buy and sell decisions. The interaction of price wicks and volume at these levels provides insight into market dynamics and potential trend reversals.

34:45

The discussion continues on the importance of volume resistance and support levels, showing how price reacts at these points with volume spikes and candle wicks. Indicators like camarilla levels and volume bands derived from the VPOC help identify key resistance points where profit-taking or selling may occur. The analysis stresses integrating volume and price action for a comprehensive understanding of market behavior.

36:30

This segment highlights the necessity of including support and resistance analysis within overall price and volume evaluation. The speaker explains how traders should anticipate price movement around volume points like the VPOC and use these insights to inform their decisions. They emphasize developing a natural analytical conversation with the chart to reduce emotional reactions and better manage investment risks.

37:42

The speaker addresses the emotional challenges traders face, advocating for calm and disciplined analysis. They mention additional tools like trend monitors, trend dots, and pivots that complement VPA techniques to help manage emotions such as fear and hope. The goal is to maintain clear, emotion-free chart analysis to protect capital and improve trading outcomes.

38:47

Emotional control using VPA and indicators

38:47

The speaker discusses how indicators provide the best chance for success in trading and invites viewers to ask questions in the chat, which will be answered either there or live. The presenter then transitions to sharing their screen and mentions starting from a different point, specifically referencing a 15-second chart.

39:53

Dow futures 15-second chart example

39:53

The speaker discusses a 15-second Dow Jones futures chart illustrating a market reversal and congestion phase. They highlight the importance of volume price analysis (VPA) in identifying price waterfalls and subtle volume changes that signal potential reversals. Key points include rising volume on certain candles, narrowing spreads, and falling volume on others, which provide traders with confidence and emotional clarity when managing profits and exit decisions.

41:41

The segment covers the emotional challenges traders face during market reversals, especially when profits shrink and the market fluctuates around prior gains. The speaker emphasizes patience during the congestion phase, noting the significance of the volume point of control as a strong support and resistance level, applicable across different time frames. They explain how congestion builds protective platforms for trades and potential breakout points.

43:27

This part focuses on a wedge-shaped price action around the volume point of control that acts as a support zone, providing a solid platform for trend development and trade entries. The market attempts to break resistance multiple times with injections of volume driving price upward. The speaker describes low-volume tests as supply and demand checks, advising traders to place stop losses just below this narrow support area to manage risk effectively.

45:22

The discussion elaborates on a clear example of trading both sides of the market within a half-hour window—short into congestion and long on breakout. The speaker overlays price action across different time frames, comparing a 15-second chart to a 3-minute chart, highlighting volume patterns and candlestick wicks as indicators of buying interest. They provide a simple method to assess market sentiment and bias by analyzing candle structure and volume trends.

47:20

Here, the speaker assesses the late-stage rally near a key resistance level, noting that it may be too late to enter the move due to limited upside remaining. They stress the greater importance of slower time frames over faster ones in determining market weight and trend strength. Additionally, they briefly check currency market conditions, observing the yen’s flatness and the dollar’s recent selling followed by a mild rally.

48:18

The focus shifts to broader market indices, showing divergence between the Dow, Nasdaq, and S&P 500. The Nasdaq is attempting to rally while the Dow and S&P 500 are weaker, reflecting a mixed market. The speaker references seasonal factors like the Santa rally and the short trading window at year-end, suggesting these influence current market behavior and structural weakness.

49:42

This segment reviews individual Dow 30 stocks on a 3-minute chart using TradeStation’s radar screen with volatility, trend, and volume indicators. The speaker contrasts volume levels across stocks, noting Apple’s high volume versus low volume names like Honeywell. They explain that a stock’s influence on the index depends more on weighting than raw volume, highlighting the top five Dow stocks that together comprise about 37-38% of the index’s weight.

52:04

The speaker continues discussing volume and weighting relationships within the Dow stocks, pointing out that high trading volume doesn’t always equate to higher index influence. They emphasize that understanding these distinctions is key to trading stock markets effectively. The segment closes with a transition to a hot list including Tesla, referencing a previous post shown by Anna, indicating forthcoming analysis.

53:03

Stock scanning and options trading overview

53:03

The segment discusses significant market volatility, highlighting Tesla as a major mover with considerable volume. It explains the importance of using tools to analyze daily dollar gains and how stock analysis can often be done outside market hours by reviewing daily charts. The speaker introduces the concept of accumulation patterns by market makers, emphasizing that stocks typically go through extended congestion periods before moving upwards, rather than sudden rebounds.

54:05

The focus is on understanding stock behavior during and after accumulation phases, noting how market makers accumulate shares during congestion. The segment explains how low volume tests and well-defined support and resistance levels emerge from these congestion areas. It also touches on scanning tools like the radar screen and market scanner, which help quickly analyze gainers and losers on the day using customizable criteria such as RSI values.

55:01

This part details the use of scanning tools for intraday stock analysis, highlighting RSI as a filter for identifying strength in stocks. It introduces options trading as an appealing but complex strategy due to its low cost and leverage. The segment warns that options are often misunderstood and misused, emphasizing the need to understand their mechanics and risks, despite their popularity and advantages for traders.

56:09

Options trading benefits and risks are further explained, including the appeal of limited risk when buying calls or puts. Covered call writing is mentioned as a favored tactical approach, where traders rent out stock by selling call options to earn premiums. The segment transitions to discussing recent price action in Apple’s stock, analyzing short-term charts and volume to understand resistance levels and accumulation-distribution dynamics.

58:10

The analysis continues with detailed volume and price action observations on Apple stock, comparing candles and volume to benchmark market strength. It stresses the importance of price and volume alignment in technical analysis: when they agree, it signals strength, but disagreement requires deeper investigation. The segment notes signs of weakness and congestion, illustrating how volume spikes do not always translate into price movement.

59:27

The final segment highlights a downtrend supported by rising volume and consistent bearish trend indicators across multiple timeframes. It acknowledges the volume traded as sufficient for intraday opportunities and briefly revisits options trading risks, such as time decay. The segment closes by shifting focus to another asset, gold, signaling a transition in the market analysis.

01:00:29

Gold market and Renko charts

01:00:29

The discussion begins with the current bullish outlook on gold, highlighting recent price movements near $1900 per ounce. The speaker notes that if gold surpasses $1900, it could rise to $2000 and beyond, especially as inflation concerns grow. Typically, gold benefits from inflation, and the key support level at $1840 has been breached, which may now serve as a platform for further gains.

01:02:12

The speaker transitions to technical analysis, emphasizing that volume price analysis (VPA) principles apply universally across charts. They introduce trading with Renko charts, praising their effectiveness. Several Renko charts with different time frames (15-second, 30-second, and one-minute) are used to analyze market trends, showcasing the power of the Renko optimizer tool.

01:03:07

A detailed explanation of Renko chart settings follows, including brick sizes and trend indicators such as trend dots and trend monitors. The trend dots change first, signaling shifts in market direction, followed by the trend monitor. The speaker demonstrates how these indicators help track market momentum and congestion before price movements continue.

01:04:11

The final segment highlights the advantage of non-time-based Renko charts over traditional time-based charts. Renko bricks form based on price movement rather than time, which reveals momentum more clearly. The speed of brick formation reflects market activity, making Renko charts a valuable tool for analyzing rapid or sluggish market conditions.

01:04:39

Non-time based charts and momentum

01:04:39

The speaker explains that non-time-based charts like Renko and tick charts avoid the sluggishness seen in time-based charts. They switch focus to futures markets, noting the ES 5-minute chart is near the volume point of control (VPOC) and likely to show limited movement. The NQ is also around its VPOC, while the YM appears poised for a potential upward move.

01:05:14

Price activity is currently subdued on intraday index trading, with limited movement expected. However, the stock market remains active. The speaker briefly mentions available indicators and tools on quantumtrading.com compatible with platforms like TradeStation, TradingView, NinjaTrader 7 and 8, and MT4/5 before wrapping up.

01:05:44

Software updates and customer support

01:05:44

The team is actively developing and enhancing NinjaTrader versions 7 and 8, including updating indicators and porting features from platforms like TradeStation and TradingView. Customers who have previously purchased indicators, even up to 10 years ago, will receive full credit toward upgrades or new programs such as the forex or stock trading programs. This ensures ongoing value and support for long-term users.

01:07:06

Purchasing a full package grants customers free access to all future indicators, upgrades, and developments without additional charges, along with 24/7 support. The speaker highlights available resources such as analysis and books on Amazon in both Kindle and paperback formats. Additionally, the forex program has attracted stock traders who recognize forex markets as central to understanding broader market sentiment shifts between risk-on and risk-off environments.

01:08:13

Forex program relevance for stock traders and closing remarks

01:08:13

The discussion explains how assets are bought and sold in bulk, requiring conversion to cash and then into other asset classes, with this flow of money passing through the forex market. This highlights the importance of currencies to market sentiment. The trading principles apply broadly across forex and stock trading. The program offers deep analysis including volume price and bonds, attracting traders worldwide from various markets. The session concludes with thanks and an invitation to the next forex webinar.