Always Look at the “Right” Volume
A Volume Mistake Many Are Making Now
Volume patterns can confirm price action and uncover opportunities before they hit the mainstream, but if done improperly, traders can miss signals and be late to catch fast-moving equities.
As stocks have moved higher in 2012, some analysts have remained skeptical about the upside potential because of the light volume. With gains of over 13% in some sectors, however, this has been an opportunity many traders and investors do not want to miss.
If you look at the below chart of the Spyder Trust (SPY), the reason for the analysts’ caution is clear. As SPY has moved higher from the October lows (line a), the volume has kept declining, line b.
If you look at the narrow range and the low volume so far in 2012, it is quite striking, but I believe it is a mistake to have based your strategy only on the volume of broadly based ETFs when so many individual stocks have exhibited bullish volume patterns.
READ FULL ARTICLE
|
Join us for The Traders Expo New York on February 19–22, 2012 at the Marriott Marquis Hotel as we bring together traders, like you, from around the world with one goal in mind—to help you make better trading decisions and more money!
