AD Volume Histogram
Click on the thumbnail for the full size chart
Very similar to the AD Histogram Exploration, the AD Volume Histogram uses advancing and declining volume instead of issues.
Both offer very promising potential as short term indicators. Again, in their raw form they are not perfect, but when right they are very right and when wrong, very wrong. They do seem to be, however, more right than wrong. With a little filtering work, I believe the “wrongs” can be mitigated easily enough.
Basically, when advancing volume is greater than 95% of total component volume for the composite, that is a potential short term short sale on the next day’s open. The inverse is also true. 95% or greater declining volume is a potential buy. Neither circumstance indicates a new trend and the trade only last for a day or two. Don’t get confused when you see one of these pop up for one of the ProShares “short” ETFs. You have to actually think when looking at one of these.
Needs more work, but a lot of possibilities here.
