Low Volume Stocks
What is the significance of volume in stock prices?
When they mention that a stock price went up with high or low volume, what significance does the volume have?
I realize it lets you know how much it’s being bought and sold, but so what? Does that come into play in some other way?
A chartist would go on and on about the intricaties of volume but I’m no chartist.
So, in a nutshell if a stock goes up or down on high (or really high) volume then there was probably a good reason for the move ie people probably really wanted in or out of the stock for a reason.
If a stock moves up or down on low volume it may have just been a slow day where nothing was really going on so the move is less important.
As an example suppose a stock moves from 50$ per share to 49$ per share on low volume. You like the price so you try to buy at 49$ per share. Well since the volume was so low the stock moved on probably just a few small sellers (who are probably done selling) so when you try to get the stock for 49$ per share you may only get a few shares before you push the price right back to 50$ per share. Of course if the stock went to $49 on high volume there are probably still lots of sellers around and you can probably buy alot of stock before having much affect on the price.
Low Volume Rally: 2-20-10 Stock Market Analysis