GB,
Re: >Ben, Please can you explain why you think a price increase must be tied to an increased volume?>
I dunno. I'll try. I took a masters level class at BU in 1983. We were taught that there are a number of indicators that help you interpret the market's action. The teaching point applied both to individual stocks and to the broader market and was that some indicators are obvious and easy to read; others are more obscure and harder to interpret. The text credits Bernard Baruch as being an astute trader who used the indicators successfully.
After price, obviously, the instructor presented volume as the leading indicator. I look to volume to confirm price moves. Volume is relative and thus, if the stock advances on light volume, that's not as bullish as if it advances on heavy volume. The text stressed that a stock's movement on a particular day must be interpreted in the context of its average daily volume and broader market volume. I think all your comments are quite true as well and don't mean to imply volume is the only indicator or an absolute in any case. I also look at overall market breadth (advance/decline ratio, number unchanged, number of new highs/lows, total volume, etc.), general trends in specific groups, IPO action, action of "barometer" stocks, etc.) Hope this is responsive to what you asked.
r/s
Ben |
