Leave the Screen and Go Away
When there is low volume, there is relative consensus about market value; when there is high volume, there is uncertainty. Uncertainty is what moves markets and facilitates future trade
It gets lonely sitting at my trading desk all day, with no one to talk to except few folks on Instant messenger. But that's what trading is all about. It is a lonely job where bulk of the time you have to just take notes from the market.
Yesterday, by the end of the trading day - this is what market told me -
LEAVE the Screen and Go Away. It seems more and more people are listening to the message. The confirmation comes from volumes. The NSE F&O Volume touched a low of 28 943.8 crores - I don't remember when was the last time I saw such pathetic volumes.
There are no catalysts - Market needs surprises to violently move in any direction. Right now there are no triggers (except currency movements) for market. There is no reason to buy or sell.
There are opportunities but in few select pockets - like Textiles, Sugar, Tea, Oil Drilling and Offshore Services and mid-cap Tech Stocks.
Price is the Action and Volume is the force - The best measure of price action is Average True Range (ATR). It is a measure of volatility and signals how much an instrument can move in a single day.
The True Range indicator is the greatest of the following:
1. Current high less the current low.
2. The absolute value of the current high less the previous close.
3. The absolute value of the current low less the previous close
ATR offers two signals - 1. High Values warn of market tops and bottoms; 2. Low Values indicate ranging markets. Right now, we are in a ranging market. The Average True Range (volatility band) of Nifty on April 09 was 154 points; and now on May 09, the Average true range on Nifty is just 100 points - a drop of 35%. In last five days it has been less than 75 points. The volatility range is just getting tighter.
The reason - Volumes have dried up substantially. There is no reason and conviction to trade on either side of the market.