Taking Stock: Strategy Shift

Now that I have found a resource for the Cumulative Volume Index (CVI - T2104), I have been putting some thought into things and have a mildly different perspective. I have noticed some things after having found the CVI. That somewhat new perspective from after having found the CVI, I think merits a slight shift in strategy.

The CVI can go in one of three directions: Up, Sideways, or Down.

I noticed that when the CVI was in an uptrend was the timeframe in which I made the most money (I found the CVI after the fact). For example, the beginning of March to the middle of May (you can see the inflection point in the CVI).

While the CVI has been in a sideways trend, the overall market has been weaker and in a sort of mode of indecision. I think a general trend in a specific stock can continue with a sideways CVI, but just need to be more wary of potential weakness.

And, of course, when the CVI is in a downtrend ... I think you get the picture.

I also noticed that when the inflection point in the CVI is when the market started to weaken, and different sectors of the market started to go in different directions. Over the past week or two, I was certain that the broad market would sell off (Dr. Leeb's and Dr. Roubini's opinion gave me confidence), when I could actually have been watching the CVI for confirmation of that (don't ignore Leeb & Roubini, they are very credible). The one thing that I don't know at the moment is as to if one would be pre-emptive of the other. I was thinking of watching Treasuries for an indication of the flow of money, but maybe I could just simply be watching the CVI instead. Watching the Treasury yields still leaves a little bit of guesswork to be done, whereas not as much with the CVI.

It all makes perfect sense, since it is an indicator if the flow of money either into or out of the overall market.

It looks as though there could be another inflection point to the upside forming, but I will give it another day or two to be decisive. I'm very excited to see a possible uptrend in the CVI, because I made quite a bi of money in the last uptrend. It also makes trades come that much easier.

I will definitely be paying more attention to the CVI and those inflection points from now on.