Volume analysis

[andretrader]

I was had a discussion with some traders.
wanted to share it here...



(1)A stock moving upwards with high volume:::
could be increasing demand for the stocks, or some big fund or long term big investor selling their lang posistions...BULL&BEAR??

(2)A stock is moving upwardsm on LOW volume, :: A lot of trader/investors cant buy enough stocks without pushing the price higher.
And not enough big sellers. A BULL SIGNAL ? or BEAR??

Most "technical" advising books say that high volume is good for new highs, og new upward moves.
But isnt that very individual for every stocks?!?

 

[prince-in-jail]

You have to see volume as an ongoing process. When long, you would prefer INCREASING volume while the stock makes new highs to make sure there's still enough participation at those price levels and lower volumes at down days (or minutes whatsoever, depending on the time frame).

But on the other hand if you see volume rising suspiciously high at rapidly rising or falling prices it usually indicates a top or bottom as lots of stocks are exchanging hands. Those volume levels mostly are several times the average volume. So don't call it a top just because volumes have been increasing continiously. Take Citigroup for instance. You see heavy volume spikes at the bottom and today's candle has a long lower shadow. It suggests we might start a rebound attempt.