MA had a big move today. the LEV plot says the same as the IBD Acc/Dis rating (E).
MA had a big move today. the LEV plot says the same as the IBD Acc/Dis rating (E).
Mike Scott
Cloverdale, CA
Thought the chart show big buyers away, not accumulating.
How does that show they were accumulating, prior to today's rise?
I am still trying to learn how to read LEV.
KevinKT,
I believe that is what Mike is saying, Large players are not behind the move in MA today, the chart shows a clear negative divergence from price. This along with IBD's accum rating should be a red flag that the price move is not the result of large players accumulating.
matt
That was what I was trying to say. There was a divergence and large players have not been behing the move. They probably were playing today however, it is difficulty to find 3.5 million shares changing hands without institutional involvement. Institutions can start accumuating on today's news if they want to but looking backwards the chart was not inviting.
Mike Scott
Cloverdale, CA
After reading Pascal’s book, I said to myself, this guy is SUPER BRIGHT! What a clever way to analyze the market? I jumped in and have been a follower ever since. I have downloaded the spreadsheets most every day and tried to make stock selections. Then came the robots. I jumped in again.
Since my success up to last fall had been limited, I started to focus more attention on the CANSLIM approach with the super posts by Mike Scott. I am just scratching the surface in this area. After selecting stocks with the CANSLIM approach, I go see what the VIT database is showing. Here is an example with Biogen (BIIB):
I may be wrong, but when I look at the chart of BIIB below, I see strong accumulation after a pullback (consolidation). So I went to the VIT web site and below are the VIT charts for BIIB.
Basically, VIT charts say that this stock is under distribution by large players and accumulation by small players, and the small players are moving the market, just like the Master Card example by Mike. It is possible and only the future will tell.
On the other hand, it begs the question that I have been asking myself for a while: Have the “Market Rulers” figured out Pascal’s approach and that of a bunch of copycats?
We all know it’s a mouse and cat game. This is why I am also skeptical about CANSLIM, since these guys must be exploiting that approach as much as they can. The only hope for CANSLIM is that you cannot stop companies from making profits!
I am looking forward to your comments.
Normand
Normand,
The market is mainly trading on a "liquidity base". This means that when money comes one side of the market for example on a price jump, large players will sell some of their position into the strength.
the EV method mainly measure an equilibrium and not a strength. Hence, it should be used mainly when the price is in a trading range or at some support/resistance zone, in order for you to confirm that the support is bought or not.
Also, let's not forget that most funds invest in a few stocks in the same sector for risk issues. hence, calculating the MF by sector is also important and when you invest in a stock, it is better when the LEV/AB patterns are in accordance with the sector situation. The same can be said for market investing: when you invest against the market direction, even with a strong stock, the price of that stocks is likely to follow the whole market.
This means that because of high market correlations, when investing, you need to go top down: from Market to sectors and then to stocks. The stock's EV pattern is always the last step.
If you look at the ranking of BIIB in the list of EV stocks, it is 519 out of 1028. MA is 271 out of 1028.
I usually do not buy breakouts when large players are selling the break-out. However, on a leading stock, I'd buy pull-backs to a 10D, 20D or previous base support line if the Large players are NOT selling in the pull-back.
Let's also not forget that all back-tests have shown that using LEV/SEV alone, without any other indicator does worst that buy/hold method. You need to use the EV method together with a value appraisal method. Support/resistance, Fib retracements, all of them are price based value detection methods.
I use the Active Boundaries method, which captures a trend between boundaries. The whole set of stocks is ranked using the combination of AB (Better buy on a pull-back to the lower boundary), LER (Better buy when large players are buying when on a pull-back) and the sector correlation (better buy when the sector is "hot".)
The EV tool alone is very disturbing for CANSLIM investors who buy break-outs, because the EV/AB method is NOT a breakout buying method. This is why I like to see Mike here: as investors we all need to see different approaches, to understand what works and what does not depending on market conditions.
It is similar for pocket pivots: in a pocket-pivots, large players will sell partial positions in strength and hence the EV pattern could be down. However, pocket-pivot stocks are stocks that are not at an equilibrium. hence, you need to refrain from trading the EV pattern, except when a stock that had a pocket-pivot some days ago does not attract large sellers on a pull-back to a base. This means that even if large players are interested in distributing shares in a volume boost, they are not interested in selling when volume disappears. therefore, this shows that selling pressure is circumstantial and not fundamental.
Pascal
Originally Posted by Normand
Thank you Pascal for your always enlightening comments.
Could you please address my concerns about large program traders trying to disperse their trading over time to avoid being detected by the type of analysis VIT does.
It would be very interesting to get comments from Mike on how he uses VIT data in conjunction with his CANSLIM analysis.
Normand
The issue that large players face is mainly to trade very large positions. These take days to trade in/out. Hence, they need to take advantage to sell high when they see liquidity coming or use dark pools to avoid the open market.
The best way not to be detected is not to be there. The second way is to trade when a lot of people are trading. hence, the liquidity based trading.
Pascal
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