Volume Based Technical Analysis
"Minute-by-minute trading volume shows reversal points in the market, helping you know when to buy and sell!"
MarketVolume's proprietary technologies give you unique insight into market directions.
Stock Volume is the number of shares of a security that are traded during a specified period of time. It tells you how many shares changed hands between buyers and sellers.
Stock volume represents the volume of a single stock (single public company); It can be used to evaluate the flow of money to or from a single stock (security), to analyze trading activity in this stock, to define the liquidity of a particular stock and, by using volume and price analysis together, to define the current sentiment, as well as to predict changes in this feeling and the price trend of this stock.
Stock volume can be used to analyze a single stock for the purpose of trading this stock or options or futures of this stock. The volume of a single stock does not reflect the health of the economy and cannot be used to evaluate an industry or stock market mood.
Index Volume represents the total volume of all stocks included in a particular index. Therefore, the volume of the S&P 500 index is the total volume of all 500 stocks that are included in the S&P 500 index basket. Thus, index volume represents the trading activity in a particular market sector or particular group of stocks that are covered by this index.
Index volume helps to define the money flow and sentiment in specific market sectors. An analysis of volume and price of indexes helps you to evaluate a particular industry and to predict changes in the mood of this industry. In addition, some indexes may be used to define the health of the entire economy (S&P 500 and DJI indexes, for instance).
Chart 1: S&P 500 chart with reversal market by the huge volume surge
With index volume-based technical analysis, you will know when it's the right time to buy or sell your security. It doesn't matter if you are not trading an index-derived security, because most securities follow the trend of the major indexes. You may use index volume to analyze an index trend and predict possible changes in the sentiment and trend of this index for the purpose of trading Exchange-Traded Funds (ETFs) on this index, options and futures on this index, index tracking mutual funds, options and futures on the ETFs of this index and stock from this index basket. As you see, index analysis opens a far wider potential for trading than does a single stock analysis.
For instance, an S&P 500 index volume analysis could be, and should be, used to trade:
- SPY stock (an ETF that tracks the S&P 500 index)
- S&P 500 Index Options
- S&P 500 Index Futures
- Emini S&P 500 Futures
- SPDRs Futures
- Options on the S&P 500 index Futures
- Rydex S&P 500 Bull and Bear Funds
- and many other securities developed to track the S&P 500 index performance.
MarketVolume®'s Index Volume-based technical indicators are the result of analysis based on the volume of all stocks in a particular index. Thus, technical analysis gives an extremely accurate picture of overall market activity in real time. By using MarketVolume®'s Index Volume Indicators, you will have access to real-time and historical, intraday (up-to-the-minute), daily, weekly and monthly volume data for the major indexes, such as the Dow Jones Industrials, the S&P 100, the NASDAQ 100, the Russell 2000, and the S&P 500, etc.
Exchange Volume represents the sum total volume of all stocks in a particular exchange or stock market. MarketVolume®'s Exchange Volume indicators are the result of technical analysis based on the volume of all stocks in a particular market. We provide signals of market change as easily understandable charts and analyze in real-time more than 11,000 stocks that are traded on the NYSE, NASDAQ, and AMEX exchanges.
Unlike the indexes, there are not a lot of securities that are developed to track the exchanges' performance and which can be used for trading on the basis of results of technical analysis applied to the volume and price of the exchanges. However, exchange volume data are widely used by professional and institutional investors to define the health of the economy and the sentiment of the entire stock market. Analysis of the volume-based technical indicators applied to the exchanges helps to reveal bullish and bearish markets, define bottoms of the stock market crashes and tops of the market bubbles. Thus, exchange volume-based technical analysis helps you to trade with more confidence, select a safe trading strategy, limit losses and increase profit.
MarketVolume®'s Exchange Volume indicators are excellent tools for letting investors know where the overall market is going. Our signals give an accurate portrayal of the market.