Volume’s Greatest Hits

  • August 23, 2000
  • Eddie Kwong

One standard approach I’ve made a part of my trading arsenal
 is to look at price
and volume surges followed by trading range action that is accompanied by low volume. 

Here’s a good example I saw last week in Ariba
(
ARBA |
Quote |
Chart |
News |
PowerRating).

Notice how volume surged at the same time ARBA ran up and broke out to new
highs. This was followed by a week’s worth of ranging behavior accompanied by
low volume. What this suggests is that traders who bought into and fueled the
huge price surge in ARBA were holding onto their shares as ARBA bounced within
its range. An absence of selling like this suggests that the stage is being set
for a move to higher levels. 

See you tomorrow,

Eddie