Chart Indicators

Bottom Finders' research and technology development focus on three key indicators designed to analyze the supply and demand pressures driving stock instruments. These indicators were developed from the perspective of a market maker, reflecting the tools and insights they would use to influence price movements. While supply and demand are fundamental factors, we acknowledge that market makers also rely on advanced instruments like options, utilizing Greeks (Delta, Gamma, etc.) and other derivatives to hedge and manage risk. However, all these activities ultimately impact supply and demand, which is what these indicators aim to capture.

The indicators are explained through the lens of a market maker, encouraging you to think, "What would I do if I were a major bank or market maker managing this stock?" Because of this perspective, the indicators are considered "leading," and each is prefixed with "MM," short for Market Maker. The toolkit includes four indicators: three proprietary tools—MMDemand, MMSupply, and MMVolume—and the widely used On-Balance Volume (OBV). OBV serves as an independent, secondary validation to ensure the analysis remains accurate and unbiased.

Before diving into how these indicators work, we encourage you to take the time to fully understand their principles and methodology to maximize their effectiveness.

The MMDemand indicator reflects the demand pressure on a stock. The green line with white bottoms and tops and will gyrates between 0-100 but rarely goes below 20 and above 75. The key thresholds for oversold conditions are 40 and for overbought is 60. The yellow line is a long-term average and if it is above 50, the stock is considered bullish and if its below 50 its bearish.

When the green indicator goes below 40, the indicator is signaling the demand is low and the price action is going to look for ways to bring buyers back to the table. As a result, you should look for some level of support where you expect the price action to level out. If it keeps declining, that is an indication of extreme selling and to wait for another dip below the threshold and another level of support for leveling out.

On the other hand, if the green indicator goes over 60, the indicator is signaling the demand is high and price action is going to look for ways to bring sellers back to the table (or where big banks look to exit). As a result, you should look for some level of resistance where you expect the price action to level out. If it keeps inclining above 60, this is an indication of extreme buying and a good place to either exit (with the banks) or to place a trailing stop. The price action may be looking to establish another zone of trading, but here is where you decide whether to take profit or continue the ride. Smart traders take profit.

The MMSupply Indicator reflects where the supply currently resides. This indicator is essentially measuring volume and keeps a running tally of where the inventory is. The question it tries to answer is whether the inventory is allocated with retail investors or with market makers and big banks? As a result, the numbers to the side of the graph should be ignored, but instead the indicator should be viewed on where the red line exists on the graph – bottom, middle, top. 

When the red line is near the bottom, the indicator is signaling the market maker is low on inventory and is going to look for way to get some of it back. This usually proceeds with selling from the retail traders following a break in some trendline or some news release about the stock. Retail traders should understand that market makers will sell you the stock, try to scare you out of your position, and then resell it back to you or someone else.

When the red line is near the top, it usually follows a down trend where the market maker has filled their pockets with inventory and are ready to start selling it back to retail investors. This usually proceeds with buying from retail traders following some analyst upgrade or positive news release. Retail traders should understand this concept and learn to move with the market maker, and not the opposite as he or she wants you to do.

As you will see, the ideal signal is when the demand indicator is low (below 40) and the supply indicator is high. This should be interpreted that the market maker (or bank) has dried up the market and are ready to move the price back up after they fleeced the retail traders and put profits back in their pockets. Hopefully you get the picture by now.

The MMVolume indicator is the NET sum of volume between buyers and sellers per bar. When the graph is above 0, that means there are more buyers than sellers, and when the graph is below 0, it means there are more sellers than buyers. The extremes on either end is a reflection on buying or selling pressure. This indicator can also signal if the buying or selling is increasing or decreasing where you can base your trading decision. Based o the pattern this indicator reveals, it can indicate the length of time a market maker will keep pressure before they take a break or turn in other direction. When it crosses over from positive to negative value, this can be viewed as a change in trend.

The On-Balance Volume (OBV) indicator is a technical analysis tool used to measure buying and selling pressure in the market. It combines a stock's price movement with its trading volume to give traders insight into the strength of a trend or potential trend reversals. This indicator is particularly interesting to Bottom Finders because while OBV and MMSupply are calculated differently, they are opposite of each other thus confirming accuracy within reason. When MMSupply is high (meaning inventory is in the market makers possession), the OBV will typically show low (meaning the stock is not in retail traders’ possession). This can also be the opposite when MMSupply is low and OBV is high. Bottom Finders recommends using OBV as a confirmation to the MMSupply indicator and nothing more.