Chapter VIII: Volume Stratification Analysis tracks the volumes associated with price levels over the entire history of a stock. The resulting analysis yields a framework for understanding the mechanism behind support and resistance levels, and a scientific basis for predicting price behaviors due to those levels. |
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| The Volumetric Profile is the central concept behind Volume Stratification Analysis. This is nothing more than the cummulative volume according to price range. The red bar marks the price range corresponding to the current price of CME shares. |
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Blue bars depict the Volumetric Profile for various price levels of CME Group Inc.. The thick orange line is the Volumetric Price and the maroon line is the Secular Price. General Volumetric Health is 2 on a scale from 1 (best) to 3 (worst), because the price at $306 is below the Volumetric line at $322, indicating major problems. However, some support may still exist on either side of the $294 level. Two levels of volumetric turbulence underlie today's price. They are at (approximately) $280 and $180. The strongest is near the $180 strata. |
| Support Level ID | Price Range | Peak Magnitude |
| 1 | $280.00 - $280.99 | 3.99 |
| 2 | $180.00 - $180.99 | 4.94 |
| To the upside, a layer of potential resistance hovers around the $520 level. |
| Resistance Level ID | Price Range | Peak Magnitude |
| 1 | $520.00 - $520.99 | 2.30 |
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| Horizontal maroon lines indicate Negative Volumetric Peaks. Price intervals with these characteristics are often associated with gaps, although they sometimes operate as support levels. Quarterly and yearly turn-arounds are circled. Two sharply defined valleys exit below the priceline at $220 and $90. The deepest is near the $90 strata. |
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| Here, the horizontal lines mark the points of Maximum Negative Slope in the Volumetric Profile. These strata are known to act as resistance levels against upward movement, and are sometimes associated with yearly and quarterly tops. Also, as is typical of resistance levels, they may do double duty as support, but that is not the typical case. |
For Members: Deeper Analysis, with Price Predictions for CME Common Stock |
| Thursday, March 18, 2010: We have news on MicroSoft, ticker symbol MSFT. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning Mylan Inc. and Patterson Companies, Inc.. From the News Archive: (3/17/2010 ) Favorable events happened at LoJack Corp and ACM Income Fund. Meanwhile, bad news came from LSI Corporation and Sempra Energy. |