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Technology Stocks : Compaq

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To: Leo Francis who wrote (634)11/15/1996 10:08:00 PM
From: Leo Francis   of 97611
 
On Balance Volume is a running total of volume.It seeks to show if volume is flowing into or out of a security.The basic assumption, regarding OBV analysis,is that OBV changes precede price changes.The theory is that smart money can be seen flowing into the security by a rising OBV.When the public then moves into the security, both the security and the OBV will surge ahead.The OBV is said to be in a rising trend when each new peak is higher than the previous peak and each new trough is higher than the previous trough. Once a trend is established, it remains in force until it is broken.Since OBV breakouts normally precede security breakouts, investors should buy long on OBV upside breakouts.Likewise,investors should sell short when the OBV makes a downside breakout.This method of analyzing On Balance Volume is designed for trading short-term cycles.Investors must act quickly and decisively if they wish to profit from short-term OBV analysis.LF
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