This clear, five-step process, which combines volume and chart analysis, has proven highly effective in identifying stocks that went on to become market leaders. In reviewing many of the interviews that are conducted in the MoneyShow.com video studio, I am often struck by how many traders and analysts do not find volume important. Though I have no doubt that it is possible to be a successful trader or investor without looking at volume, I think they are ignoring an important piece of data. Often times, unusual volume patterns can alert the investor to stocks that will be future market leaders. As I indicated last summer, the volume surge seen in Grupo Financiero Galicia S.A. (GGAL) on August 2, 2010 caught my attention. The volume of 5.7 million shares was over ten times the daily average. GGAL soon closed above major weekly resistance and surged from $6.98 to over $16 in the next five months. This was the also the case in October 2011 when homebuilding stocks surged on heavy volume (see "Big Volume Is Bullish for Homebuilders"). At the time, few thought that the housing market had bottomed, but now that is almost becoming the consensus view. Many of the homebuilding stocks have doubled since October. During the recent World Money Show in Orlando, I gave an interview about the importance of volume in my analysis, and I explained why the entry level can be such an important factor in successful investing and trading. (See that interview here.) I thought it might be helpful to break down the process I use in selecting and recommending stocks from my high-volume scan into five steps. The process starts with isolating those stocks that show a significant increase in volume. Increasing volume is what can push a stock higher and turn it into a market leader.

pubblicato il: 24/03/2012 - 14:26