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

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

0:00

Webinar introduction and disclaimer

00:00

The webinar host welcomes attendees to the second session, acknowledging some who joined the earlier webinar. They confirm audio is working and remind viewers of the trading disclaimer, emphasizing the risks involved and advising not to use money one cannot afford to lose. The session will focus on market analysis and reviewing charts and indices.

00:59

Volume price analysis concepts explained

00:59

The session covers commodities and stocks analysis using volume price analysis (VPA), which examines the relationship between price action and volume. The speaker references books and trading programs available for learning these concepts, emphasizing their applicability across markets including forex, indices, stocks, and commodities. VPA helps traders identify their position within the price cycle—whether in trend, congestion, or volatility—and predicts future price movements. Key tools include volume data, price action, candlestick patterns, and support and resistance levels.

03:16

Support, resistance and candle patterns

03:16

The speaker explains the importance of identifying key areas on a price chart where the price is likely to pause or reverse, integrating volume price analysis (VPA) concepts, price action, volume, and candle patterns. They mention using custom-developed indicators focused on support and resistance, some based on price and others on volume. To demonstrate these concepts, the speaker will use Ninja Trader to review current market conditions and briefly discuss market behavior in August, noting that it can be unpredictable due to factors like summer holidays and the ongoing pandemic.

04:36

August market behavior and liquidity

04:36

The speaker explains that although there is less traveling during the summer months, liquidity in the market decreases, which can lead to heightened volatility and price spikes. In August, traditionally, many traders would be on holiday, leaving trading desks minimally staffed. However, this assumption no longer holds true as market participation patterns have changed, making August a more unpredictable period for trading.

05:45

2015 Chinese stock market crash recap

05:45

The speaker discusses the significant market turmoil in China during 2015, highlighting a sharp 8% drop in the stock market in August following an earlier decline in June. This period caused widespread fear because it reflected concerns about China’s slowing GDP growth. The downturn served as a wake-up call to investors, disrupting previously stable conditions and initiating a domino effect due to China’s major influence in global finance.

06:55

Recent developments in China include regulatory crackdowns on sectors like education and technology, which have already caused some market instability. Economic figures are weak, raising concerns about a possible repeat of the 2015 market scare, especially with August approaching. Additional risks include low liquidity and ongoing impacts from the virus, which may delay economic reopening and further contribute to market uncertainty.

08:05

Current market stress and Nasdaq update

08:05

The markets, particularly the Nasdaq, are currently very stressed and moving sideways without a clear direction. Although there was a recent pullback and some recovery, the overall market remains uncertain. Trading Nasdaq futures is challenging due to the narrow trading range and underlying tension. The VIX, which measures market volatility, remains elevated around 20, indicating sustained market stress despite index recoveries. This elevated VIX suggests the possibility of another market correction, though central banks, especially the Federal Reserve, are providing support to prevent a severe downturn.

10:13

Forex indicators and market sentiment

10:13

The speaker discusses market stress indicators, emphasizing the importance of monitoring the Japanese yen in forex trading. Heavy buying of the yen signals market stress and potential reversals, while selling generally indicates market optimism. The forex market can sometimes lead other markets, showing early signs of stress even if equities continue rising.

11:19

Attention is drawn to the South Korean stock market index, known as the Kospi, which has become a barometer for global growth. A stable Kospi indicates market calm and optimism. The Russell 2000 index, representing small-cap stocks, is currently underperforming and stuck in a wide trading range, signaling risk aversion in the market.

12:28

The speaker notes that the Russell 2000 is showing weakness, reflecting broader market concerns. Despite inflation discussions and central banks deeming it transient, the market remains largely indifferent. In times of tight equity ranges and declines, such as a 7-point drop in the S&P, traders might consider diversifying into commodities for other opportunities.

13:33

Commodities, particularly copper, are highlighted for their relationship with currency movements like the Australian dollar and their sensitivity to slowing growth and geopolitical issues. The session has been somewhat unstructured as the presenters work toward developing a more organized program in collaboration with David.

14:05

Stock selection using beta and volume

14:05

The speaker discusses various methods for selecting stocks to trade, emphasizing the need to filter through thousands of options. They mention exploring different approaches such as sector analysis and using free websites like MarketBeat, Finviz, and BarChart to gather stock information. Although market breadth is noted as an important factor, it won’t be covered in this session. Instead, the focus shifts to beta, a metric that measures a stock’s volatility relative to the market index.

15:20

Beta is explained as a value indicating how much a stock moves compared to the S&P 500 index; high beta stocks move more than the index, sometimes several times over. This makes them attractive for intraday trading because they exhibit significant price movement. Stocks with low beta may show little movement or be stuck in long-term congestion with no clear trend. MarketBeat simplifies this by providing beta values for stocks, aiding traders in identifying potential candidates based on volatility.

16:44

Using MarketBeat’s high beta stock filter, traders can examine stocks with strong volatility. After filtering, one can analyze stock charts to assess patterns such as consolidation, distribution, or accumulation phases. Additionally, the tool allows filtering by geography (Canada, UK, Europe, Australia, US exchanges) and by sector, enabling traders to narrow down stocks to those fitting specific criteria or market segments.

18:02

The speaker recalls prior sessions highlighting the strategy of looking for reversals at sector tops or bottoms, which applies both to investing and trading. They emphasize that there is no single approach to trading; many methods exist depending on the trader’s goals and time frame. MarketBeat also offers filters for market capitalization, sentiment, and ratings, though some features require a subscription. The speaker personally recommends subscribing due to the quality of data presentation.

19:13

Volume is stressed as a crucial criterion when selecting stocks, with a recommendation to focus on stocks trading over one million shares daily. The speaker cautions against high beta stocks with low volume, as such stocks may have erratic price movements and low liquidity, posing risks when trying to exit positions. Market makers may force unfavorable prices during market declines. Therefore, prioritizing stocks with sufficient volume ensures better liquidity and smoother trading.

20:56

The speaker shares a personal example of selecting two stocks with high beta and adequate volume. They highlight Antero Midstream with a beta of 3.3, noting its strong trading volume and favorable chart patterns observed both on MarketBeat and NinjaTrader platforms. This illustrates the practical application of combining beta, volume, and chart analysis to identify promising trading opportunities.

21:28

Analyzing AM stock with volume price analysis

21:28

The speaker analyzes a stock’s volume and price action, noting a potential distribution pattern with declining volume during attempted rallies. They highlight the stock’s history from its IPO at $21 down to $2, causing investor dissatisfaction, followed by a near V-shaped recovery with heavy volume inflows. Despite attempts to rise, volume falls and pullbacks occur, indicating potential weakness.

22:33

On the monthly chart, the down volume on a key candle is less than expected, suggesting the stock might continue downward or represent a primary trend after the V-shaped recovery. The speaker stresses the importance of viewing daily price action in broader context and mentions tools like Ninja Trader and MarketBeat for deeper research, including institutional ownership and short interest, which is moderate at 3%. Earnings season is noted but no immediate reports are found.

24:25

The focus shifts to Crescent Point Energy (CPG), another energy company with a low beta of 2.97. The discussion touches on the impact of the green revolution and political factors influencing traditional fuel industries like oil and gas. Rising oil prices are mentioned as an important market factor to consider alongside company-specific analysis.

25:01

Review of CPG energy stock and volume profile

25:01

The volume profile confirms the metrics observed earlier, showing an average volume of 3.8 million shares with some gaps in trading. A notable candle with high volume but a small body suggests indecision, as rising volume with a small price move often indicates uncertainty. This volume profile helps in understanding volume price analysis (VPA) more clearly.

26:06

After a gap down, the stock found support but struggled to rally significantly despite considerable buying, moving from around $3.09 to $3.61. The stock previously traded near $52, which might tempt some investors to see it as a bargain, though caution is warranted. It is an energy stock characterized by strong beta, volatility, and volume, making it an intriguing option for consideration.

27:10

The stock has passed its earnings date on July 29, reducing immediate earnings-related risks. Further research through resources like MarketBeat is recommended. The presenter switches focus to a five-minute chart of the stock to analyze shorter-term price action, complementing the daily chart review.

27:41

Intraday analysis of AM with quantum indicators

27:41

The discussion focuses on analyzing a high-value stock using quantum indicators, highlighting a messy upward trend and a significant resistance level around the ten-dollar mark. The speaker explains the accumulation and distribution indicator, noting how its thickness increases when price approaches it, signaling stronger resistance. The $10 level is identified as a critical value area or volume point of control for the stock.

28:50

The stock experienced a distribution phase followed by buying support near the volume point of control at $10. Volume-based resistance and price-based resistance are distinguished, with the volume point of control acting as a strong support and resistance level. Despite some distortions in volume display, the volume profile shows how price struggled to move beyond key levels and returned to the value area, indicating sideways movement and consistent volume patterns.

30:28

Volume analysis reveals that lower volume on up candles and tails at the bottom of candles had limited impact on the stock’s movement. The range within certain candles is still decent for day trading, with price fluctuations between $9.40 and $9.05 providing good intraday moves. The stock’s volatility exceeds that of the benchmark index, making it attractive for short-term traders.

31:41

The speaker introduces the Camarilla indicator, another price-based tool, noting important resistance levels at R3 and R4. Recent price action shows a waterfall decline with volume point of control playing a key role. Upward movement is limited by volume and market bias, which currently favors the short side. The stock is unlikely to reverse strongly without significant buying pressure.

32:46

If the stock continues higher, it is expected to pause near R1 and enter a congestion phase between S1 and R1 for several hours. A break above R1 is unlikely to surpass R3 due to strong resistance from the accumulation and distribution indicator. Conversely, a break below S1 could lead to a decline toward S3 and a retest of today’s low, emphasizing the importance of volume-based resistance in predicting price movements.

33:17

The stock selection is based on beta value to ensure safer trading conditions, emphasizing the necessity of volume and liquidity. While volatile stocks can offer big moves, lack of liquidity poses significant risks. The speaker briefly pauses to switch data feeds, underscoring the importance of reliable data in trading analysis.

34:52

US indices overview and intraday charting

34:52

The discussion begins with an overview of the primary US indices (YM, NQ, ES) on both daily and five-minute charts, highlighting unusual divergence where NQ, which usually leads, is lagging behind YM and ES. The YM is trading around a long-legged doji with fragile but present price support and resistance levels. Yesterday’s price action on the YM showed a big upper wick and decent volume, typical for the slower summer trading period in August, with a platform of resistance forming that the market is struggling to break.

36:16

On the NQ daily chart, there was notable buying interest that failed to sustain momentum, with volume peaking and then falling off. The market shows signs of weakness and lack of strong movement. Similarly, the ES daily chart reveals multiple resistance pivots near the volume point of control, indicating a market top that’s struggling to break higher. The overall market environment is described as ‘toppy’ and fragile.

37:15

Focusing on the five-minute YM chart, a strong resistance level is identified using the accumulation distribution indicator, which highlights heavily tested price levels. This resistance has repeatedly capped price advances. Volume appears low due to the timing before the cash market opens, but this is normal as electronic volume dominates before the cash open. The market is currently attempting to break through this significant resistance.

38:12

Volume profile analysis shows falling volume as the market tries to rise, with a volatility trigger in place to attempt breaking a solid resistance level. On the NQ five-minute chart, similar strong resistance is seen around 990. Volume price analysis (VPA) reveals that despite some widespread candles, volume is lighter than expected, suggesting limited upward movement potential. Price is currently around the volume point of control, indicating likely sideways action until a breakout occurs.

39:08

Both NQ and ES are trading near their respective volume points of control, where heavy volume concentration creates congestion and limits price movement. Without significant volume to push prices, the market is expected to remain range-bound. The presenter then transitions to examining multiple time frames and commodities to provide additional market context.

40:02

Currency indices and market sentiment

40:02

The segment discusses recent movements in currency indices, highlighting a strong rally in the yen and a slight weakening of the dollar. It explains how yen strength and dollar buying impact market indices negatively, signaling potential weakness due to these currency trends and their sentiment indications.

40:33

This part elaborates on the relationship between dollar and yen buying and their negative effect on market indices. It also introduces the use of multiple short-term chart time frames, especially the 15-second chart, to anticipate market moves and better understand sentiment shifts.

40:59

Focusing on a specific chart, the speaker analyzes a significant price move that broke through a strong resistance line, which has now become support. This suggests a positive trend transition, forming a solid base for further upward movement, with evolving trend colors signaling market reversals.

41:34

The trend monitor tool shows potential trend changes with color shifts indicating bearish risk, though the current trend remains supported. Volume analysis shows decreasing activity at key levels, which is viewed positively for maintaining the position. The segment concludes by suggesting a look at other time frames for further confirmation.

42:01

Multi-timeframe volume and price resistance

42:01

The speaker discusses a strong trading level and critiques the common risk/reward approach to trading, emphasizing instead an analysis based on chart obstacles. They explain that when considering a trade, one should assess what on the chart might hinder price progress. Using the example chart, they note a significant 100-point move and observe that volume is decreasing at higher price levels, which reduces volume-based resistance and favors an upward move.

43:09

The volume acting as resistance is seen as diminishing, which supports a potential upward move. However, there are multiple minor price resistance levels clustered together, which collectively become significant. The main resistance area has been tested multiple times, holding the price down. This clustering of price resistance levels requires careful consideration when evaluating the trade opportunity.

44:12

The speaker evaluates the trade setup by examining both price-based and volume-based resistance. While individual resistance levels are minor, their clustering increases their importance. Moving to a 15-second chart, volume above the volume point of control (VPOC) is very light, indicating reduced resistance. On the one-minute chart, volume has dramatically decreased from previous congestion, and there is no significant price resistance, making the setup look favorable for a trade.

45:13

With volume and price resistance both declining, the speaker expresses confidence in taking a scalping trade for small profits, such as five to ten points or pips. The approach is straightforward and logical, relying purely on chart data rather than preset risk/reward ratios. This method is emphasized as a key principle taught in their educational program.

46:08

On the three-minute chart, price resistance is minimal with only a couple of minor levels currently being tested. The trend monitors show positive signals with healthy volume and bullish candle patterns. As price approaches higher levels, volume rapidly declines, suggesting little resistance ahead, allowing price to move quickly through these regions. This confirms the overall positive outlook for the trade.

47:08

Volume point of control and breakout trading

47:08

The speaker explains the use of the volume point of control (VPOC) histogram to identify key price levels. The histogram helps traders recognize breakaways confirmed by volume and anticipate rapid price movement through low volume areas, as these levels lack resistance. Additionally, the market tends to disregard areas that previously had low importance, implying that such zones remain insignificant for future price action. The discussion also highlights a significant region that will become relevant if the price reaches that level.

48:12

The trend monitor indicator is introduced as a powerful tool when used across multiple time frames. The speaker advises against using it in isolation, emphasizing that observing transitions from bearish to bullish trends becomes clearer when comparing faster and slower time frames. The example given shows a transition from bearish red shades to potentially bullish blue, indicating a possible trend reversal.

49:10

The speaker discusses the importance of recognizing strong price resistance levels on higher time frames, such as a 10-minute chart, which can explain market pauses on lower time frames. For instance, price movement from 800 to 820 may pause at the 820 resistance level, clarifying why shorter time frame charts might show hesitation. The significance of time frames in trading is stressed, with higher time frames carrying more weight in determining support and resistance.

50:07

Trading multiple time frames is emphasized as essential for understanding market behavior. When a trader is confused by price action on a lower time frame, checking higher time frames often reveals reasons for pauses or reversals. This principle applies regardless of the indicators used, highlighting that time frame hierarchy is a fundamental rule in technical analysis.

50:35

Trading importance of multiple time frames

50:35

The speaker reviews the daily chart for copper, noting that the commodity has been very bullish. After a strong rally accompanied by rising volume, copper’s price has recently pulled back to the volume point of control, indicating a key level where price action is consolidating.

51:10

Commodities: copper, oil, gold, silver analysis

51:10

The speaker discusses market congestion and price movement in trading, focusing on volume point of control (VPOC) and how rallies may run out of steam near these levels. Using oil as an example, the speaker describes an extremely volatile day with high volume triggering either congestion or reversal. In this case, a reversal occurs, supported by strong buying volume that pushes prices higher.

52:18

The explanation continues with the classic VPOC action: rising prices accompanied by falling volume typically indicate a move towards the VPOC, which acts as a market fulcrum or equilibrium point. Price tends to consolidate near the VPOC until either bulls or bears gain control, causing a shift. This concept is likened to a seesaw where balance is maintained until one side gains dominance.

53:14

The speaker elaborates on how volume drives markets and that price agreement at the VPOC represents neutrality. Using oil as an example again, the market shows bullish tendencies supported by consecutive inventory draws, despite a recent build. Seasonal demand factors such as the U.S. driving season also influence oil’s price dynamics. Meanwhile, gold struggles around the $1813-$1818 range, trading near its own volume point of control.

54:17

Gold’s price remains congested around its VPOC on daily charts, indicating limited movement until a strong volume-backed breakout occurs. Silver exhibits a similar pattern, often moving in tandem with gold, although it is not precisely at its VPOC. The accumulation-distribution indicator reinforces these strong price levels by highlighting channels formed through repeated testing of support and resistance near the VPOC.

55:24

These price channels provide excellent conditions for breakout traders, offering clear stop-loss placement opportunities above or below breakout points. However, patience is essential when trading breakouts, as premature entries can lead to losses. Congestion and these trading principles apply across all timeframes, from seconds to months, emphasizing the universal nature of volume and VPOC analysis.

56:19

The discussion shifts to currency markets where the yen, dollar, and pound are moving sideways, while the euro is selling off strongly. The market appears to have lost momentum, running out of ‘poof’ or energy, suggesting a period of consolidation or limited directional movement in the short term.

56:58

Market congestion and trading fast timeframes

56:58

The market is showing fragile price action with strong resistance on the 10-minute chart and narrow trading ranges on daily charts. Volume is concentrated at key levels but lightens beyond them, indicating weakness. In congested, non-trending markets, traders must often shift to faster time frames like 15-second charts to find opportunities. This high-speed trading requires quick decision-making, automation, and precise order execution, which may not suit all traders.

58:24

Price tested a strong price base level but struggled to break through, accompanied by moderate volume and a two-bar reversal pattern indicating weakness. The market’s movement depends heavily on volume levels and price-based support and resistance. The analysis highlights the importance of watching volume and price action at critical levels to anticipate potential breakouts or reversals.

59:20

Volume patterns suggest a lack of strong selling pressure despite some price declines, with a notable platform of support between 68 and 60. A recent price move broke through a support level but on weak volume, signaling a fragile market condition. The comparison of volume across candles emphasizes the need to quickly interpret volume changes in real time to assess market strength or weakness.

01:00:39

Using fast time frame charts, such as seconds charts, can help traders quickly learn to identify candle patterns, overlays, and indicator signals, which then improves understanding on slower time frames. Attention to volume and price levels helps confirm potential breakouts, though current volume is insufficient to strongly support a move higher. This approach encourages learning one aspect at a time to build trading proficiency.

01:01:28

Trading decisions based on the Volume Point of Control (VPOC) involve setting comfort levels for entry depending on price action and volume histograms. Resistance levels on the one-minute chart are critical to monitor, and traders should plan exits around significant volume clusters. The segment stresses the importance of aligning entry and exit points with volume-based support and resistance to manage risk effectively.

01:02:27

Trade entry, stop losses and volume levels

01:02:27

The speaker discusses potential point ranges in trading on the YM (E-mini Dow futures). They explain the cost differences between the mini YM and the big YM contracts and outline their approach to assessing trade levels, including where to consider exiting if certain price points are reached.

01:02:55

The speaker emphasizes that prices are unlikely to fall to certain lower levels due to expected congestion. They briefly apologize for overrunning time and then direct viewers to quantumtrading.com for trading indicators, primarily for NinjaTrader 7 and 8, with some mention of Tradestation.

01:03:27

The speaker demonstrates the Tradestation platform, specifically Tradestation Global linked with Interactive Brokers. They show a one-minute Nasdaq (NQ) chart with time and sales data streaming from Globex, explaining how the platform integrates brokerage data for trading analysis.

01:03:55

Trading platforms and quantum trading indicators

01:03:55

The speaker discusses various trading platforms, focusing on contract sizes and the importance of identifying large trades beyond typical noise levels. They highlight TradeStation versions 9.5 and 10, both equipped with a powerful radar screen useful for scanning up to a thousand instruments or charts simultaneously. Other platforms mentioned include MT45, NinjaTrader 7.8, and TradingView. The indicator system allows customers to start with one and upgrade to full or partial packages with credit applied, supporting flexible transitions between platforms without additional charges.

01:04:52

Customers can try individual indicators before deciding to upgrade, with credits offered towards higher packages or education programs. Unlike other companies, the speaker’s system does not charge for transferring indicators between platforms of equivalent price, such as MT45 and TradingView. TradeStation is noted as the most expensive due to its radar screen features, but platform transfers are free otherwise.

01:05:48

Purchasing the full package grants access to all future indicators. Upcoming developments include a radar screen equivalent indicator for TradeStation and new volume-based indicators targeted at stock trading on NinjaTrader versions 7 and 8. The development team is actively working on these enhancements, indicating ongoing support and expansion. The program discussed is a comprehensive forex trading system, which also attracts stock trading students.

01:06:43

Forex program and relational market analysis

01:06:43

The forex market is central to the global financial system because it serves as the conduit through which assets are converted into cash, whether moving between commodities, equities, or bonds. This conversion process highlights the importance of sentiment flows in forex, as it reflects the underlying risk dynamics of the market. Understanding relational analysis is crucial for traders across all asset classes, as it explains the fundamental concept of risk-on versus risk-off behavior—money shifting between higher risk for higher reward and lower risk for lower reward. The program emphasizes this core principle and includes a funded forex segment where traders manage up to two million dollars of the firm’s capital, reducing personal risk. Additional resources and market insights can be found on anacooling.com.

01:08:06

Resources, books, and webinar closing remarks

01:08:06

The speaker thanks the audience for attending and encourages them to explore the books available on Amazon in both Kindle and paperback formats. They mention the webinar schedule, noting that future sessions will likely occur every other week, with notifications sent via email. The segment concludes with well wishes for the trading day and a farewell.

 

By Anna Coulling – creator of volume price analysis