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Strategies & Market Trends : Your Worst Trading Enemy.. You -- Ignore unavailable to you. Want to Upgrade?

To: ArnieC who wrote (117)	1/19/2001 12:12:22 PM
From: Fun-da-Mental#1	Respond to of 223

Some things I've noticed about volume: 1) If a stock is in a long-term trend, and it makes a move in large volume in the direction of the trend, that means the trend will continue. This is common knowledge. However, 2) If it makes a move in large volume AGAINST the trend, this does not mean the trend is over, although it may be weakening. Usually a sudden, high-volume move against the trend will reverse, and the trend will continue. Examples: - In 1999, dips on high-flying tech stocks were usually on high volume, which always made me think okay, this time it's over, time to short. Not so as it turned out. - Bear market rallies. These are almost always on high volume, driven by news. Those who want to believe say wow, the news is good, and the stock is making a high volume breakout! Time to buy! I was repeatedly fooled this way by Alternative Fuel Systems (V.ATF). Eventually the downtrend did reverse and it went from 75 cents to 5 bucks, but I had sold most of my position at that point (stopped out!) and I only managed to break even. Lesson learned: watch the trend first, volume second. Fun-da-Mental