Long Term Report based on Selling & Buying Volume (SBV) Indicators
October 17, 2005
The following report has been base on the SBV indicators
analysis of 4-year period by using 15-day volume moving average (VMA) applied.
| Chart 1 |
The S&P IV and SBV indicators.
15-day IV and SBV Moving Averages. 2001 - 2005 years. |
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Analysis of previous index reversal
Chart 1 clearly shows the previous long-term reversal point in
July 2002 - February 2003. Associated with this reversal point volume surge
could be divided into two volume surges: first in July-August 2002 and second in
October 2003.
In correlation with the SBV indicator the first volume surge in
July-August 2002 is clearly Selling. Furthermore, the volume preceding this
volume surge (April-June 2002) was Selling as well (look at the duration of
Selling SBV indicator). The fact of accumulation
of Selling volume over three months period (April-June 2005) in conjunction
with two months duration (July-August 2002) Selling volume surge could be
evaluated as the major long-term Selling volume surge. By analyzing SBV
indicator for this period the following statement could be accepted:
| The long-term reversal point in 2002
followed after 5 months of negative SBV indicator with 100% maximum
negative magnitude (July 30, 2002), and 60% average magnitude. |
The second huge volume surge was Selling as well (negative
SBV indicator). Even it was a short lived in comparison with the Selling
volume accumulation in April-August 2002, the max negative magnitude of SBV
indicator reached 89% on October 11, 2002. The accumulation of Selling volume
in October 2002 together with April-August 2002 Selling volume caused the market to reverse it's trend of a long term.
The logical question could be raised about positive SBV
indicators in November-December 2002, however from the chart 1 could be seen
that volume in this period was much lover then the average volume in August 2002
and average volume in October 2002, furthermore it could be waived from the
consideration.
Another important factor that should be taken into
consideration that in period from July 2002 until June 2003 the S&P 500 index
was below $1,000 point. This means that shares of the companies from the index
basket was traded at very low price and the importance of any Buying volume
surges and positive SBV indicators should be reduced.
Analysis of the current market.
By analyzing the
S&P 500 index for the last one and a half
year only two volume surges may be noticed: in April 2005 and in September 2005.
By comparing these volume surges with reversal volume surges
in 2002 clearly could be seen that the recent volume surges are much lover
magnitude and duration. By analyzing this volume surges in correlation
with SBV indicator we can state the the volume surge in April 2005 was clearly
Selling and we can see an mid-term up-move market reaction in May-July 2005.
The second volume surge in September 2005 was Selling as well, however SBV
indicator barely overcome 33% level in this case.
The next step in our analysis was correlating the high
positive SBV indicators values with volume. By doing this this we came to
conclusion that all of them barely overcome 60% level and were on relatively low
volume for the last 1.5 years. Furthermore, they could not be taken into
consideration as Buying volume surges that could be compared to Selling
reversal volume surges in 2002.
Conclusion
By following the analysis of recent volume behavior in
correlation with SBV indicator we came to conclusion that the current Buying
volume surges are smaller than
the initial Selling volume surges that reversed the prior trend in 2002 and established the
current up-trend, furthermore the market will likely continue along its
current up-trend;
Research Team
MarketVolume®
Important:
The analysis results presented in the "Long-Term
SBV Report" may differ from the outlook presented in
the daily Market Outlook. Results may also differ from the trading signals
generated for Exchange Traded Funds (ETFs), or from any other research and
analysis efforts shared with our members. The "SBV Report", the daily
"Market Outlook", and the "trading signals for ETFs" are products developed
by independent research teams, delivered to MarketVolume® members. While sharing
some research results, these autonomous research teams may use different systems
and may have dissimilar market outlooks.
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