STOCK GOODIES PLAYS OF THE WEEK

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EquiVolume Chart Volume Climax

EquiVolume boxes can be used to identify exceptionally high volume periods that represent a volume climax. A typical selling climax involves a new price low, an intraday plunge and a strong intraday recovery with good volume. An EquiVolume climax occurs with an exceptionally wide box. Often the box is wider than it is tall. This represents a period of relatively little price change with high volume, which shows indecision that can sometimes foreshadow a significant move.

Chart below shows Weatherford International (WFT) finding support in the 9-10 area from mid January to early March. An exceptionally wide EquiVolume box formed on February 25 to further reinforce support and act as a volume climax. The subsequent breakouts at 11 and 13 opened the door to an extended advance.



Chart below shows Akami Technologies (AKAM) with a big gap down and an exceptionally wide EquiVolume box that looks more like a square than a rectangle. This wide EquiVolume box acted as support in the 16-17 area. AKAM firmed for a few days and then gapped higher with good volume. After this short-term reversal and bounce, AKAM returned to the wide EquiVolume box and tested support here. Also notice that a falling channel formed. The stock successfully tested support and broke channel resistance with a breakout. Admittedly, the breakout lacked a wide EquiVolume box for confirmation, but held after a successful test at 10 in early October.