Replies to post #5308 on Strategy Central

[kenwong]

Farooq: re Low Volume

Always wondered about that ... volume.

Current low volume could mean either of 2 things:
1) no sellers ... so price should go higher, or
2) no buyers ... so price should go lower

Also, when volume spikes ... as price rises from a recent low, that can also mean the number of potential sellers has returned. And, the buyers that created the spike might be tempted to book their profits especially if it's a big spike.

I do understand that strong volume usually reflects buying by "da boyz" (big institutional buyers) but they also play games with price, too. For example, Bob Pissani (CNBC) once described a scheme that's perfectly legal that they often practice. Let's say they want to manipulate a million shares. So, what they'll do is discreetly fill a bunch of small block buy orders over a short period of time ... and then finish with several large block buy orders to trigger buying reaction. As buyers (both retail and other institutions) react to the volume spike, the institution then unloads all the shares purchased earlier at lower prices for a quick profit.

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Posted by: farooq
In reply to: GLENO34 who wrote msg# 5292 Date:5/23/2006 11:58:48 AM
Post #of 5306

Very low volume is good for bull case.
If there is no one ready to sell then price should go higher.
Farooq