As a trader of Apple, we are constantly analyzing the latest Apple product news, the analysts reports on supply chain, and the day to day price action. But are you paying attention to volume?
Sure news and analyst reports will send a shot of adrenalin into Apple once in a while, and support and resistance levels are certainly to be respected as they leave a bread crumb trail of past Apple action, but volume is the life force under it all. There are millions of people trading Apple every day, but the price doesn’t always paint a clear picture of what is actually happening, and straight volume is very difficult to interpret.
But the ebb and flow of volume does. It is a direct corollary to the amount of money that flows into and out of Apple stock. But how can you see that flow, is there a standard indicator or tool that accurately reflects this flow of money?
The answer is yes and no. There is an indicator, but you won’t find it on your trading platform, or your favorite online charting program. You will however, have it on your desktop if you are a member of the AppleInvestor Trade Room (AITR). The indicator is called RetroVol, let’s use RV for short.
RV looks at volume is a very different way, by comparing past volumetric flow with current volume. And it gives you a time-based comparison of what is normal versus what is happening now; hence the prefix “retro.”
The interesting thing about RV is that you could be looking at what appears to be a spike in AAPL volume, yet the price is not climbing. RV will show money is actually flowing out of the stock relative to what such a volume spike might normally infer. These divergences are common and easy to spot with RV, giving the trader a heads up on what is likely to happen on the next few bars.
So, by comparing the present with the past, and measuring the rate at which volume is converging or diverging relative to those two time periods, RV actually provides a leading indicator to price action. This is pretty significant, as most all indicators that look at price or volume are lagging indicators, leaving the trader with nothing but stale bread crumbs. With RV you get fresh baked bread, hot out of the oven.
RV has been incorporated into most all the AppleInvestor trading algorithms, either as a feature component, or as a filter, or confirmation tool. There is a stand-alone indicator that can be used in any timeframe, and it even comes with visible tradable queues, indicating whether the user should be bullish or bearish.
The graphic below shows the RetroVol indicator (the yellow line) in three timeframes (5min, 60min, and daily bars) with Volume in blue behind it, and AAPL price action above. The most basic way to use the indicator is actionable events that happen when it crosses the zero line. Above zero is bullish and below is bearish; accumulation vs distribution.