Chicago, IL – April 6, 2010- Kevin Matras writes about how to use weekly price and volume to help determine future market direction. Stocks in this week’s article include Aspen Insurance Holdings Ltd. (NYSE: AHL), Herbalife Ltd. (NYSE: HLF), CarMax, Inc. (NYSE: KMX), The Talbots, Inc. (NYSE: TLB) and Volcom, Inc. (NASDAQ: VLCM).
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Price typically follows volume.
And if your stocks are falling on an increase in volume, that suggests selling, and maybe a set up for a larger correction. Moreover, if the subsequent up days are made on lower volume than the down days, that’s additional foreshadowing that stocks might need to take a breather and find new ‘lower’ ground.
And that’s why I want to focus on stocks with increasing Price and Volume in this week’s screen.
If a stock is rising on increasing volume, it can be a sign that new buyers are coming in and some short sellers may be giving up. But rising prices on decreasing volume suggests a lack of new buyers and waning underlying pressure.
So in this week’s screen I’m searching for stocks with increasing volume over the last couple of weeks; not just a couple of days, but weeks. This helps me see true demand that seems to be building over time. There may be an occasional light day here and there, but in total, I want to see it growing week by week.
And while there are plenty of stocks that fail to meet these criteria, there are lots of really great stocks that do.
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