If price is king, then volume is the queen that is able to heavily influenced the direction of price. Analyzing volume is important because volume often point us to huge moves in a stock before it happens.
Here are some reasons why you should look at a stock's volume:
In the next few articles in this chapter, we will delve deeper into volume and its effects on stocks. Below is a sample to give you a taste of how unusual volume can move a stock and the market.
In the chart above, you can see how CBS suddenly had a very unusual volume during one week. This volume was higher than normal. The volume was about 9X more than the usual trading volume!
This hinted of huge selling by some interested parties and smart money. Not long after that, the stock dropped. About a year later, the stock lost almost 40% of its value.
In the chart above, you can see how an unusual volume formed on the daily chart of SPY. SPY is the etf of S&P 500. There was a very large bullish bar on heavy volume which hinted of aggressive buying by market participants. The stock market had a huge bull run in the next 3 months.
That's the power of volume analysis!
Aug 17, 18 05:07 AM
In this lesson we will take a look at the technical developments of OKA Corp's stock price and why it moved the way it did. We will also have a look at what might happen to OKA's stock price.
Aug 16, 18 07:28 AM
In this lesson, we will learn how and why BMY manage to bottom out and start a new uptrend.
Aug 14, 18 08:19 AM
In this lesson we will learn and examine why Pentamaster was able to recover all of its losses to start a new uptrend and achieve new highs.
Aug 13, 18 05:56 AM
The KLCI is currently at resistance territory after a nice big rally. I would consider a sideways trading a possible scenario at the moment.
Aug 13, 18 05:22 AM
In this lesson, we will learn how AAPL's 15 Min stock chart formation help to send the stock higher for 2-3 days to give traders a nice swing trading opportunity.