New Highs and Volume
Excuse the pun, but StockCiphering.com puts a lot of stock into New Highs
and Volume, especially the latter.
Contrary to the old phrase "Buy low, sell high", buying a stock as
it's bursting into new-high territory offers the best opportunity to make
money quickly and profitably.
As a stock price climbs back towards its prior highs, it has to get past
the resistance of all of those buyers who bought as the stock's price was falling and are
eager to break even or get out with a small loss. If a stock is able to
burst through the final barrier of its old high, there is no longer any
overhead resistance waiting to impede its progress... there isn't a single
buyer who is sitting on a loss. Therefore they are only willing to sell
at higher and higher prices, and that can drive prices up in an
explosive manner.
StockCiphering.com provides screens of stocks that involve resistance at their
highs. The Cups With Handle screen lists stocks whose
charts are exhibiting that unique formation.
Ceiling Bumpers lists
stocks consolidating close to their 52-Week, 6-Month, and/or 3-Month highs
that don't appear on the Cups With Handle screen.
Finally, Ceiling Bursters lists stocks that have just
burst through those levels of resistance on high volume.
Which brings us to volume...
Volume is the key component in the movement of a stock. Some traders
believe that price alone reflects all the information one needs to know
about a stock's action. However, volume gives a clearer picture of the
financial and emotional involvement of price moves. In comparing two
stocks that move up 8% for the day, especially when breaking out to new highs,
the one that advances on volume that is far above average is the one that deserves
attention, because it reflects a bigger commitment on the part of buyers.
StockCiphering.com calculates a ratio comparing the volume of each stock
against its average trading volume (50-day exponential moving average)
in order to assign its Performance Rankings
and reports that volume ratio in its various stock screens.
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