| When a stock takes off or breaks out of a bullish | | | | According to Bill O'Neil, founder of IBD, you would like |
| formation you must have a 50% or more increase in | | | | to see a 1% or greater move in the market |
| volume to validate the move. This works just like the | | | | averages with an increase in volume from the prior |
| thrusters on the space shuttle. The greater the | | | | trading day. This is called a "follow through day." All |
| volume, the greater the thrust to propel a stock | | | | major market moves have started with this type of |
| higher! You always want to see that surge of buying | | | | price and volume action. |
| in a stock. It validates your opinion that it is a stock | | | | Volume confirms price action....IT IS JUST COMMON |
| you want to own because it obvious that everyone | | | | SENSE. |
| else wants to own it too. This upward movement on | | | | Don't panic in those early minutes when your stock |
| increased volume creates momentum which pushes | | | | opens underwater. Keep a level head and know the |
| the stock high and in turn brings in more buyers. | | | | first half hour is often bizarre. If an hour of trading |
| The same holds true for the market. The only way | | | | goes by and your stock hasn't done squat, it's time |
| to confirm if the price action you are seeing is real is | | | | to consider alternatives, but if it's making it's way |
| to see if you have a huge increase in volume to | | | | back up, it's usually best to keep it in play. |
| confirm it. | | | | |