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Registered User
Joined: 12/3/2004
Posts: 7
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I track on a daily basis any stocks that move upwards on volume that is 5 times greater than its 50 day average volume and whose price is within 85% of its 365 day high. In an upward moving market this usually generates 10-30 stocks meeting that criteria and in a weak market only 0-15 stocks will show up.
On Friday, 70 stocks showed up even though the market dropped significantly. I have never seen this in the 4-5 years that I have used this indicator. And I run it every day. I looked carefully at the stocks that popped up and what they had in common was that most of them had a share value that was no more than 2x the book value. It is very odd that on a very poor market day, 70 stocks move upwards in price on sudden volume increases of 5x their norm.
Any theories?
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Registered User
Joined: 4/18/2005
Posts: 4,090
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most indexes are nearing short term suport so some bounces here could be suspected?
There are alwayse SOME stocks moving up... I actual like to look at gainers on a weak and down day... often those are the ones that you come across 4 months into a bear market or after and find that they cruised and you think "where was i for that move"
We could be still seeing some "sector cycling" . Various industries just gettign started while others are peaking, on various time frames. For instance my strategy has been pulling up allot of regional banks lately. It's either a bottom beginning for the industry (the very begining if so) or a counter trend bounce for the industry.
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Registered User
Joined: 12/3/2004
Posts: 7
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Scott,
I agree that there are always some stocks moving up, but I have not seen 70 stocks moving up on a down day when they meet the criteria of 5 times normal volume and while being within 85% of their annual high. That is quite unusual.
I thought about "sector cycling" as a cause, but they were from many varied sectors. I also thought maybe these were stocks getting moved into the Russell Index's annual shuffle, but I couldn't find an indication of that.
So it is still a mystery. And like you mentioned, I'm wondering if 6 months from now I might regret not having bought some of them. But I try to stick to my methods and not jump onto a new bandwagon unless I have a good understanding of what's happening.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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To be honest ... some aspects of the market are still a mystery to me. Honestly I'm not expecting doom and gloom from this correction. It may in my opinion .. probably not be as bad as the May 06' correction... but to be honest I have a feeling it may just run lateraly from here.... Just a feeling.
I used to try to track all sorts of things... and I found that that leads me to making projections. I'm probably not qualified to do that.... but I can say what is happening now... and usually there is some mystifying action... and I traded what is gong on NOW ...not what I think is going to hapen soon.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Friday was the Russell Index's rebalancing. According
to Investors Business Daily this created larger volume.
I ran a test of the all stocks watchlist. Fridays volume
was the high of the last 10 days on about 30% of the
stocks.
Also (to a much lesser extent) with the 4th of July
being in the middle of the week. I think many are
taking extended vacations and may have wanted
to square up positions before the "holiday".
Thanks
diceman
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