Weekly Price and Volume

By Kevin Matras
On 1:00 am EDT, Tuesday October 6, 2009

With the market and plenty of stocks hitting a rough patch over the last two weeks (although the market is doing a good job of trying to redeem itself so far this week), I've noticed that the pullback came on a noticeable increase in volume.

I mention this because price typically follows volume.

And if your stocks are falling on an increase in volume, that suggests selling, and maybe a set up for a larger correction.

Moreover, if the subsequent up days are made on lower volume than the down days, that's additional foreshadowing that stocks might need to take a breather and find new 'lower' ground.

And that's why I want to focus on stocks with increasing Price and Volume in this week's screen.

Once again, price should follow volume.

If a stock is rising on increasing volume, it can be a sign that new buyers are coming in and some short sellers may be giving up.

But rising prices on decreasing volume suggests a lack of new buyers and waning underlying pressure.

Just like a ball on top of a hose needs more and more water pressure to push it higher, the same is true to an extent in the markets.

Once you let up on that water pressure, the ball will fall back down. And when buying demand eases up, so too will the market.

So in this week's screen I'm searching for stocks with increasing volume over the last couple of weeks; not just a couple of days, but weeks.

This helps me see true demand that seems to be building over time. There may be an occasional light day here and there, but in total, I want to see it growing week by week.

And while there are plenty of stocks that fail to meet these criteria, there are lots of really great stocks that do.

The parameters to the screen I'm running this week are as follows:

Price >= $5
Volume (avg. 20 day) >= 100,000
Zacks Rank less than or equal to 3
Projected 12 month Growth Rate > 0
Recent Week's Price > Price from 1 Week Ago
Price from 1 Week Ago > Price from 2 Weeks Ago
Weekly Volume > Weekly Volume from 1 Week Ago
Weekly Volume from 1 Week Ago > Weekly Volume from 2 Weeks Ago

For those using the Research Wizard, here's what the Price and Volume parameters look like. (The Price components (i6) and Volume components (i7) were done using the DBWP - Historical Weekly Prices database.)

Here are 5 stocks that made it thru this week's screen for 10/5/09:

AXS AXIS Capital Holdings Ltd.

AZZ AZZ incorporated

CHKP Check Point Software Technologies Ltd.

EBF Ennis, Inc.

NETC Net Servicos de Comunicacao S.A.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks' portfolios and strategies are available at: http://www.zacks.com/performance.

ENNIS INC (EBF): Free Stock Analysis Report

NET SVCS DE COM (NETC): Free Stock Analysis Report

CHECK PT SOFTW (CHKP): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

AZZ INC (AZZ): Free Stock Analysis Report

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