stock charts

jim leahy

the chart shown below is called a price activity chart (PAC chart). probably most here have never seen these
before. the details of its construction were described in a stocks and commodities magazine around 2004 plus
or minus a few years, i think. i'm not sure why these never caught on with chartists but i've never seen these on any
platform or charting web site. the article author originally had a web site where you could plot them but that's
long gone. the idea of the charts is to identify areas of accumulation/distribution and therefore
potential areas for stock movement. the graphs are calculated by mathematically distributing the volume
over the daily price range. the volume at any price level then gets summed over subsequent days, after
scaling them with an exponentially declining value. the accumulated volume at any price and time then gets
mapped into colors ranging from red, for the highest volume to dark blue, for the lowest.

probably the closest equivalent modern-day chart is a volume profile, although i find these easier to interpret.
the main problem with them is you can't tell which way the stock will move when it shows the largest red/yellow
areas. there are a few supplemental indicators that may help; possibly momentum or money flow. i haven't
found the ideal one yet.

let me know if you've seen or used these, or what you think about their usefulness.



Staff member
Hi Jim. Your study is similar to TOS "Monkey Bars" (and similar studies on other platforms such as NinjaTrader and Metastock) which incorporates and sums aggregates of "TPOs" (time-price opportunity) according to time of day. These were popular several years ago, but not so much these days. I prefer to look at the volume profile and weekly VWAP vs. monthly VWAP for clues. Also, on equities, I always study the "Today's Option Statistics" and "Time and Sales" for clues of market activity. For example, if the P/C ratio is low, call volume is showing "sizzle" and the "Time and Sales" shows large blocks of calls which went off at the ask, then I am assuming that the big boys are buying calls, expecting a move to the upside.O

jim leahy

thanks for your comments, dan. from what i've seen of monkey bars is that they're thinkorswim's
version of market profile, which removes time from the x axis. pac charts don't do this, but they
are similar to volume profile. i'll look at adding vwap to see if it adds any additional clues. one of the other
things i find useful for pac charts is that they're easy to run scans on, although it takes a long time to run.
there's an enormous number of floating point calculations.