Category: Money Tips Date: 2006-01-21
Popularity, is to determine the volume size of the prerequisites for a direct result of the stock price up or down. Therefore, technical analysis will be popular as an important object of study, a variety of popular indicators emerged, the most commonly used is the OBV line (On Balance Volume).
OBV line is another contribution to Ge Nanwei. As Grant's view that the vigor of the stock market trading volume, is the nature of stock prices and, therefore, the amount of the first born after the price theory. This theory than in terms of its eight rules, it seems more accurate. OBV line in substance is that it is the price that the volume of the ebb and flow kinetic energy, and then use the inertia law of physics and the theory of gravity to be explained:
As we all know, upstairs downstairs is easily tired, some, that rising energy needs of more than the decline in need. Applied to the stock market, stock prices rise, the need of energy - the more volume decreased, we need some of the less, it is gravity theory. Otherwise, under the law of inertia, static are constant static and dynamic movement are constant.
OBV line calculation is simple: to a certain day based on the following day if it closed up, and on this day of closing the transaction on the sum of the base; if fell on the closing day of using the base of this date minus transaction. Ze Yi based on the second day of the third day, and so on (see table below), these values will be marked on the map and connected, they will have an OBV line.
Trading day Nov Dec ...
Closing price (yuan) 1.0 1.1 1.3 2.0 1.8 1.6 1.7 1.5 1.8 1.65 1.9 2.1
Volume (million) 1.0 1.5 2.0 2.5 2.0 1.5 1.6 1.5 1.7 1.6 1.8 2.0
OBV value 2.5 4.5 7.0 5.0 3.5 5.1 3.6 5.3 3.7 5.5 7.5
OBV line is designed to be put up on the turnover of stock as the accumulation of popularity, so do addition, the stock fell as a popular discrete-day trading volume, so do subtraction. Therefore, the rise in OBV Quotes are mostly positive, and values can be large; Similarly, in the OBV fell Quotes are mostly negative, will be a great value. As the OBV is the characterization of transactions and therefore prices according to the amount of the first principles of the post, OBV line up, generally shows the stock price will rise, the reverse is possible, OBV line fell, indicating that stock prices will fall.
Technical analysts often OBV line and stock control lines, or if the difference from the trend, it considered to be one out of the signal. The so-called deviation from the trend is the OBV is inconsistent with the stock price. When stock prices frequently rise, hitting a new high point, OBV is in shambles and can not hit a new high, which means an increase of energy shortage, in other words, the strength of market outlook has been used less, which is a sell signal. On the contrary, if the stock price fell more than, setting a new low when, OBV line is unwilling to drop or fall very little, did not hit a new low, indicating there is power in this low-cost support, the stock has been falling to almost, afternoon rebound is expected, this is a buy signal.
OBV line set a new high value (a large positive number), stock prices should hit a new high with synchronization, if the stock price can not be a record high, or OBV high price until after the new high, indicating there is such a great Energy shares still be "raised" up the stock at this price is "mad", there are a large number of shareholders is about to profit-taking, which is also a sell signal. The same reason, OBV new low record low stock prices, when, that is, buy the signal.
When the OBV line from negative to positive when it is a buy signal; and when the OBV line from positive to negative, or the line goes down, despite rising stock prices, it means that the amount of the contract, turned down the stock will refer , should sell holdings.
In addition, OBV line slowly climbed and is steadily increasing the performance of transactions, is buy signal. But the OBV line rose sharply, the implied forward to this big deal is unlikely to be sustained, it should throw holdings, just leave.
OBV line has its weaknesses: First, it does not apply to long-term investment, as popular parting is hard to say what regularity. Second, in an atmosphere of very strong market speculation is often the case it will become invalid. Because the speculative atmosphere, a thick, making the difference in respect of many, they are often out several times a day, that day's trading volume to be significant, but in fact the market situation has changed hands is not so large, the energy flows at this time can not be effectively reflect the real energy has changed. Third, when there is volatility and large, but with yesterday's closing price the same, also does not make sense, that is, despite today's highest price went to 20 yuan, the lowest dropped to 10 yuan, but the closing price was 15 yuan, same as yesterday. This OBV line view, that day commonplace, but in fact there are 10 million of high-low price difference reflects the long-short intense fighting in the two sides, popular movements are also changing, today's 15 yuan and 15 yuan yesterday nature is different, but the OBV line does not have any reflection.
