Yep, looks to me it was having a breather, prolly bounce up very shortly.
Although the Jul 11th & 12 volume spikes is a possible warning of traders unloading.
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My Fail. Trying to move forward.
- Thread starter Growly
- Start date
Although the Jul 11th & 12 volume spikes is a possible warning of traders unloading.
Would greatly appreciate your take on how to interpret the volume....
Thanks ironchef, greatly appreciated!
Many points and takeaways to learn from. thanks.I applaud you for being disciplined. However, I'm not sure that I would call this a good trade. From my perspective, trades should either be low risk, high probability and preferably both. You may have thought it was a breakout but the reality was that it was a weak, downtrending, overbought stock up against resistance. I'm not trying to beat you up over this but a planned trade with controlled risk still can be a bad trade if the strategy doesn't have a positive expectancy. Also, I think you misinterpreted how to use bullish divergence. The bullish divergence on MACD that you could have played was in early June when the stock made a new low but MACD did not. You could have used an oscillator like Stochastics or RSI to show you that it was oversold (and also relied on the candlestick pattern). Hindsight is 20/20 and it's easier for me to point out the flaws in the trade after the fact, but I just don't think you had a low-risk idea to begin with. But you didn't fail, you just learned what doesn't work and that you need to get better. Hope that helps.
Even in hindsight, how could i feel more assured buying that early june low? i'm looking for tips here, as in my view (which i wanna change) all i see is a bounce of short term support. is that enough?
Hey fwiw... in your decision making process, did you consider the "bigger picture" so to speak? By this I mean sentiment regarding the U.S. housing market.
I'd be willing to bet without looking, that Mohawk is a fairly large component of the XHB.... the SPDR Homebuilders ETF. And here's the thing, that ETF is whats going to move this particular stock day to day. Not the other way around.
That said... kudos on the effort you put in, but in this particular instance, it might have been better to apply your signals to that ETF. The only real way Mohawk is not going to mirror XHB will be on days when there is company specific news. Either way, good luck. You're on the right track.
EDIT: I just looked.... it appears to be the #1 holding lol. Larger than Home Depot even. Its a good thing you did stop out, because Whirlpool is not going to help matters today.
https://us.spdrs.com/etf/spdr-sp-homebuilders-etf-XHB
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that's a wonderful idea. is there a place where i can find per stock in what (if at all) etf \ index it is a part of?
Yes. The ETF Database. Here ya go... here's Mohawk. Obviously you can plug in any stock.
http://etfdb.com/stock/MHK/
And here's where to find which indexes a particular stock is in.
https://www.investing.com/equities/mohawk-industries-components
This for EOD traders/daily bars. My experience.
For the most part, interpreting volume is tricky, like trying to predict weather or the wind, sometimes you get it right, most times get it wrong unless you are a pro. (Which I'm not).
Usually ordinary mid range daily bar volumes I never bother attempting an interpretation, volume can mean anything.
Volume spikes is what I try and take notice of, also volumes where price has a sudden reversal.
If I see a large spike, you could drill down intraday and see where exactly that volume is, is it looking like a large seller or buyer, ie, intraday spikes, is price running up after it or collapsing after the intraday vol spike.
On end of day (daily) chart, if not looking intraday, call the spike day a 'major day', now does price close well above the high the following days or close well below the low of the major day the following days.
Often volume spikes can be blowoff tops or blowoff bottoms, it's the last gasp before a reversal.
A series of volume bars which push for example a MA6-VOLUME above a MA28-VOLUME, would indicate something is brewing, look for a reversal especially if the trend has had a bit of a run.
As maybe mentioned, the sector that stock sits in, if it moves around, it influences the stocks in that sector so by and large price can change without volume indicating anything.
On a major sector direction change, expect the majority of stocks in that sector to show a volume increase.
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All in all, I don't think you got much wrong, (without me studying this thing intently) sometimes price will reverse with no warning, often you will get everything right, just the timing can be out a day or two.
Try and coincide your entries in co ordination with the whole sector, if sector has run for some while it may not be smart to enter, as it may want a rest when you enter.
Try and coincide your entries in co ordination with the whole sector, if sector has run for some while it may not be smart to enter, as it may want a rest when you enter.
Ah! You're never going to feel assured. In fact, that's one of the keys to trading is that the best trades are very uncomfortable. Lots of folks preach the concept of "confirmation" in trades, but personally I feel you miss the best trades because you want to feel "comfortable."
"Learn to embrace risk, seek it out. There, and there alone, is where the profits lie . . . To be paid, you must act upon your suspicions before they are manifested." -- Don Worden