E.C. -- Excellent case for technical analysis.
I use StockCharts.com (free version) to give me the OBV picture (on balance volume) on stocks before I buy.
If I don't like the way the OBV line looks, I usually do not buy. On warrants, I look at the underlying stock. i learned about OBV from the master himself, Joe Granville. Granville invented it and I think it will go down as his greatest contribution to the game.
basically, it shows whether a stock is being accumulated or distributed, as you said.
here is an example -- Wallbridge WM.TO looks like it is screwing around as usual in the 30-40 cent range, but it is actually under fairly consistent and growing accumulation, as shown by the obv trend line above and below the price chart.
stockcharts.com
(if you want you can bookmark that link. then just type in whatever stock you want and it will come up the same way with the 50 day and 200 moving average and the OBV above and below. you can also open up "linkable version," as I have, to copy and paste a chart into SI.)
fundamentally, i determined that WM was a stock with potential because of its ownership of 10 mm shares of DM, plus fresh investment by Lonmin in WM and eagerness by Lonmin to participate in Wallbridge's northern range properties at sudbury this year.
technically, the chart provided some confirmation.
if the OBV theory is right, this chart is about to break out to the upside. see how it is about to poke out above the 200-day moving average. tell me that ain't sweet!
Michael |
