When markets print very high volume, they undergo significant ownership change that exerts lasting influence on price development. -Alan FarleyThe above quote is highlighted in my trading journal and one I return to. This concept is what has drawn me to documenting stocks making new year high volume and keeping them in a watch list to observe their price action down the road. This idea also complements the market maxim that volume precedes price. In keeping with this, I decided to take a lottery trade today with a small position in BGMD.
Normally I shy away from stocks at their 52-Week low, let alone their all time low, however the volume action over the preceding three sessions drew my interest as each day was a new year high. I'm not sure if someone knows something or expects something, but the volume action clearly indicates to me that there is a change occurring here. I also found it notable that this transition happened while price action was in a tight range.
I position sized so that worse case scenario, I wake up Friday to find the company has gone bust, my maximum loss is 2% of my total account size. Best case scenario is that there is legitimate demand for this stock and it's being accumulated and I'm positioned early in the move.
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| BGMD |
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