Sunday, September 07, 2008

>High volumes not bullish always!!

Volumes say diffrent things at diffrent times:)

An important concept that many traders miss is that heavy volume is not always bullish.

Heavy volume is valuable during a breakout or at an important low. However, heavy volume with no substantial movement signals that one party is "distributing" the stock to another.

When there is heavy volume AFTER a strong uptrend, it's usually institutions distributing stock to retail investors. When you see heavy volume AFTER a long trend low, then it's usually institutions accumulating from retail investors.

Notice the common theme?

Institutions are rarely transparent with their intentions, however, they can't hide the volume they trade:D.

This is time tested thing may not be true always:)



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