Jul

8

Symmetry, from Jim Sogi

July 8, 2010 |

canarySome pretty awesome symmetry forming up this last month or so.

Chair commented before that the big down bars often seem to get mirrored by the big upside bars like today.

The other thing I've noticed is what a difference the next week makes. Last week the news stories were all end of the world, even trotting out Prechter. What a joke.

Why is it that a lot of big buying seems to occur at the highs?

As for pilot fish, seems like a big out of place vol bar is a good canary. (Sorry to mix metaphors.)

Nick White comments:

One would note that the sword in Asia has certainly not been sleeping since Friday…Therefore I would argue that such a rise as we saw in the S&P today is simply the US playing catch up with the Asian move from the holiday weekend.

I would also contend that there's a bit of relative catch up yet hanging in the stars.

Sushil Kedia writes:

How would a counter convert the concept of symmetry in prices over any time frames to testable hypotheses? I confess, I continue to have weaknesses in converting ideas to testable hypotheses. So, I will be learning from those who will share.

Pardon kindly if this next question diverts the thread to any other: How do folks like me sharpen our imagination to focus on converting vivid thinking to be able to arrive at testable hypotheses?

 


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3 Comments so far

  1. Munawar Cheema on July 8, 2010 2:43 pm

    A lot of buying at the highs means a lot of selling as well.
    By definition if it is the hight the sellers look smart. If it turns out not to be the high the buyers look smart.

    In hindsight it makes sense that the seller knew what they were doing and sold into a last gasp burst of buying but is this information useful without hindsight.

  2. Sam Humbert on July 8, 2010 2:43 pm

    “Why is it that a lot of big buying seems to occur at the highs?”

    Covered-writers rolling up to higher strikes?

  3. Andrew Goodwin on July 11, 2010 8:57 pm

    Jim Sogi asks why so much turnover appears to occur to buyers at the extremes of prices. One simple answer is that the heaviest volume appears at the turning points and is associated with a news item. Only at times when there are fleating moments of high liquidity, created by news releases that push traders to act, can players positioned from better levels unload their positions.

    One need only look at the execution algorithms and their logic as offered by the banks and other providers. One sees that many algorithmic execution formulas describe themselves as acting passively until liquidity appears. Then they describe the algorithms as acting agressively to absorb incoming orders.

    Is it any wonder that turning points occur at times of higher than normal liquidity. If relatively low liquidity is available, the opportunity to turnover shares to new buyers or sellers would not manifest itself. Therefore volume must, nearly by definition, by high near the extremes in price. When else can you unload shares in size?

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