Both charts are of the same day split in two images.
Some one recently asked some valid questions about The VolumeBreadth indicator with respect to the charts I had posted previously and how often the indicator and the market work perfectly togather. In short they asked how often is the indicator give perfect signals.
Trading can not be reduced to a simple yes and no answer, because there are so many variable that effect price and direction of any market. Traders with experience understand this well. They have adapted and learned to think in context-- evaluating all information to achieve a conclusion.
Beginer traders are usually in search of a -cookie cutter, one size fits all- answer that can apply to all market conditions or structures.
I dont blame them and this is not an attack on them, its natural human behavior to look for the simplest path.
That said, one of the most important qualities a trader must have or develope is to adapt to the market. Since market behavior is more complex then simple, a simple green means buy and red means sell will not serve a trader as well in the long run, in contrast when a trader learns to think in context and put pieces of information togather complied from the tools at his disposal to achieve a conclusion then the value of a sold indicator is realized.
Beginer traders are usually in search of a -cookie cutter, one size fits all- answer that can apply to all market conditions or structures.
I dont blame them and this is not an attack on them, its natural human behavior to look for the simplest path.
That said, one of the most important qualities a trader must have or develope is to adapt to the market. Since market behavior is more complex then simple, a simple green means buy and red means sell will not serve a trader as well in the long run, in contrast when a trader learns to think in context and put pieces of information togather complied from the tools at his disposal to achieve a conclusion then the value of a sold indicator is realized.
Moving on...
Take a look at the chart below which is the first trading day of 2010 and the two charts above are of the last trading day of 2009, Dec 31.
ES sold off very hard the last day of the year Dec 31, yet, the Volume Breadth(the indicator at top pane) did not show the same strength in the sell off... Simply the Market internal was not telling the same story as price was.
Now look at the chart below, its the next trading day which is also the 1st trading day of the year.
What does the market do??
Yes... buyers came in and moved price up hard and the VolumeBreadth confirmed this up day i.e there was a broad move up in the entir S&P 500 index.
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