This weekend past, I had an idea that it would be nice for the ASF crew to do a weekly Volume Spread Analysis club. I guess the idea is pretty simple, we pick just one large cap stock with high liquidity and solely listed on the ASX (so no BHP or RIO) and follow it on a weekly basis using the standard set of VSA tools:
* H/L/C bars (O/H/L/C bars are ok)
* Bollinger band on volume to delineate above/below average and ultra high/low volume.
The goal is for people familiar with VSA to have a place to share ideas and concepts based around a common understanding of one stock as well as providing learning resource to anyone who is curious.
The goal is not to come up with trading signals for people to follow, or to prove VSA works, or anything like that. Nor is this just a generic VSA thread for discussing the application of the approach.
To clarify: It is an Volume Spread Analysis thread. Following the weekly chart means plenty of time for everyone to participate and attempt to build a solid consensus based on discussion of their collective analysis. Only following one stock means that the thread won't be cluttered and get messy with many random charts and comments that detract from the core purposes. Following a stock listed on the ASX rather than other instruments gives us the advantage of some degree of "information reliability", we know the volume is proper volume and is the sole venue for buyers and sellers in the stock we choose.
I am starting the thread early this week, so we can have some discussion about which stock we should use, thoughts or comments on the idea, etc. I am compiling a short list of links and resources so people who are unfamiliar with VSA can have a basis of understanding if they wish to join in or ask questions which are better answered by a learning resource. This will be posted shortly.
For my perspective, it would be good if we could follow a stock meeting the following criteria:
* Highest liquidity available - ASX100 stocks probably the best list to start from.
* Primary industry stock - manufacturing, mining, drilling, etc.
* High broad market correlation - we don't want to try and and buy/sell in something that likes to spend half a year in weekly ranging.
Stocks like MCC Macarthur Coal should fit that bill. That is not my specific suggestion, just an example. Happy to hear everyones suggestions before we pick the stock.
Let me know what you think. If the idea stinks, I will can it.