Joining The Volume Cult
I admit it. At one time in my life I thought volume was a useless indicator.
Sure, you could spot many instances in which volume spiked at major lows, but I
never found this pattern to be consistent enough to provide me with good trading
opportunities.
But with the help of people like Kevin
Marder and Greg Kuhn, I’ve finally abandoned my foolish ways. Now…I
consider volume to be one of the most important tools for understand
sustainability of trends that you could have at your disposal.Â
Here is a dramatic illustration of the kinds of moves I had been missing out
on before my conversion.Â
Prior to the breakout which happened Thursday August 17, 2000, there were
three straight days of increasing volume as Sycamore
(
SCMR |
Quote |
Chart |
News |
PowerRating) ran to the
highs of its four-week trading range.
High volume on price surges is what often fuels the continuation of trend
and, in this case, breakouts to new highs. I have witnessed this pattern work
across all time frames, and I’m now convinced that it is one of the most
important relationships for traders to be aware of.
See you tomorrow,
Eddie