One of the best ways to find stocks on the move that are
grabbing the attention of investors is to screen for stocks with
This is because increased volume shows investor interest. As more
investors buy the stock, the stock's price should go higher.
But the individual investor, while important to the market, doesn't
really have the firepower to affect volume the way that big
institutional investors do.
And very few things can move a stock more than institutional
Why is that?
For one, institutions have the ability of buying tens of millions
of dollars worth of a stock and even hundreds of millions of
dollars. And because their purchases are often so large, it
typically takes weeks, if not months, for an institutional investor
to build a position.
Given this commitment, considering it will also take several weeks
or months to get out, you can be sure that these institutional
investors have done plenty of homework to feel good about the
fundamental prospects of the company.
This does not mean you can ignore your own analysis or the stock
market as a whole. But screening for stocks with rising volume
(along with prices of course) can put some fantastic stocks on your
What Kind of Volume Increase to Look For
I prefer to search for at least two weeks of increasing volume
along with rising prices. And in my testing I have found that 3
weeks performs even better.
One week volume spikes, however, will not get thru, as oftentimes
those can be driven by one day events. Instead, it's the successive
volume increase that shows true buying demand, giving this set-up
The volume increase also doesn't have to be huge. We're not talking
about a several hundred percent increase. In fact, often those
massive increases prove to be turning points.
What we're looking for are noticeable increases, like 10%, 20% or
50% increases, etc. But nothing outrageous, like a 10 fold
increase. Remember, the last thing an institutional investor wants
to do is call too much attention while he or she is in the midst of
building a position. But if you know what to look for, you can see
all of this happening in plain sight. And get in for the ride as
they flesh out the rest of their position.
- Current Price greater than Price from 1 Week Ago
- Price from 1 Week Ago greater than Price from 2 Weeks Ago
- Price from 2 Week Ago greater than Price from 3 Weeks Ago
- Weekly Volume greater than Weekly Volume from 1 Week Ago
- Weekly Volume from 1 Week Ago greater than Weekly Volume
from 2 Weeks Ago
- Weekly Volume from 2 Week Ago greater than Weekly Volume
from 3 Weeks Ago
- Zacks Rank less than or equal to 3
- Price greater than or equal to $5
- Average 20-day Volume greater than or equal to 100,000
The most important elements to this screen are the price and volume
items (especially the volume). The Zacks Rank also helps to make
sure that their earnings estimates are on the rise. The price item,
however, is a personal preference as I generally don't buy stocks
under $5. But it should also be noted that many institutions won't
either. But if you're looking for lower priced stocks, you can of
course remove this item. And lastly, the average volume item
ensures there's enough trade activity on a daily basis to get in
and out of the market easily.
Here are 5 stocks that passed this week's screen:
Rubicon Technology, Inc.
Ormat Technologies Inc.
All of these stocks look good fundamentally. But their successive
increases in weekly volume suggest institutional buying, and
warrant an even closer look.
Get the rest of the stocks on this list and start screening for
weekly volume increases to uncover institutional buying on your
own. It's easy to do.
Click here to sign up for a free trial to the
Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks
Investment Research may own or have sold short securities and/or
hold long and/or short positions in options that are mentioned in
this material. An affiliated investment advisory firm may own or
have sold short securities and/or hold long and/or short positions
in options that are mentioned in this material.
Disclosure: Performance information for Zacks' portfolios and
strategies are available at:
FURMANITE CORP (FRM): Free Stock Analysis
HHGREGG INC (HGG): Free Stock Analysis Report
ORMAT TECH INC (ORA): Free Stock Analysis
RUBICON TECHNOL (RBCN): Free Stock Analysis
STRATASYS LTD (SSYS): Free Stock Analysis
To read this article on Zacks.com click here.