My main attraction to any stock these days is purely in the volume of shares it trades that day. It’s not complicated, as it tells me that very clearly there is serious trading activity in that one stock stock alerts.
There is nothing worse than an illiquid stock, a stock that doesn’t trade very many shares or some days doesn’t trade at all. I avoid these without exceptions as it becomes impossible to exit that stock easily. The only exemption to the volume rule is a questions play that we am ready to wait on.
So what are Canadian Stock Alerts, for the most part they are only stocks that trade with strong volume, I am even interested in stocks that trade with unusual volume, meaning far more shares being traded in today than their normal daily average. When that takes place, something serious is going on, and a great many new investors are also attending to.
But sometimes you’ll see a options trading with an unusually high volume of shares and the stock is actually taking place. Remember great volume means something, and Canadian Stock Alerts is only interested in volume. In many cases that stock that is taking place, is actually just being pulled back or in fact oversold.
As I believe you’ll agree, many times it’s nothing regarding that stock itself. When the entire market drags back it usually drags everything back with it, especially when the prior day or two were both up days.
Example: On Mon a stock goes from $1. 00 to $1. 15 and on Tuesday it surges higher to close at $1. 29, you know that sooner or later it’ll give something back, after all it just climbed 30% in just two days. On Wed the entire market drags back and our stock falls from $1. 29 to $1. 16 and it does etc huge trading volume. This becomes a huge alert for me personally.
Even Warren Buffet invests this way, buying certain stocks that have dropped out of favor, but are still value focused stocks. It makes sense to consider buying a value stock on the way down, as their value will rarely leave down for long.
It is the nature of the markets at work generally, the weak hands emerge and everyone else is taking some profits off the table. This is as common as it gets.
That said, on Wed I’ll usually find many Canadian Stock Alerts that can be great buying opportunities. Remember the stock isn’t taking place on bad news, it was lost with all of those other market. There’s a big difference here, the stock simply got sideswiped by the entire downhill trend of the market.
Watching the heavy volume on the way down, you can usually see a levelling off point. Watch the rates for bids on Level II and you’ll see where there is a huge level of buying support on the bid side. That becomes our access point.
These pull backs look and feel pretty dramatic, their recovery can look just as dramatic. Buying in at $1. 16 and watching it climb back to $1. 26 on a bad market day is not unusual at all. Now suppose you bought 5000 shares, you could have netted $500. 00 profit (minus commission) in one day.
Again, a volume trend is what we all need to pay attention to.
Mike Perras copes with the Canadian Stock Alerts blog. While these alerts will never be meant as a recommendation to buy a particular stock, they are nonetheless a heads up or an aware of a certain potential positive trend.