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dragonLZ (99.39)

The Volume Story 2

Recs

10

June 23, 2010 – Comments (14) | RELATED TICKERS: GRT , HL , IAG

I’ll try to keep it as short as possible.

The premise of the Volume Story is that stocks which go up for a few months or a few quarters on a huge (never seen before in their history) increase in volume will continue to go up and will outperform the market by quite a bit.

The first Volume Story was posted on 9/27/09, and it included a list of 10 stocks which fit the "volume profile" at that time. 

Here are the returns of those 10 stocks since 9/27/09:

GCI   +69.3%   (Price then $9.38, Price now $15.88)

HWD   +62.1% (Price then $8.09, Price now $13.11)

LVS   +53.6%   ($17.60, 27.04)

FITB   +40.9%   ($9.59, $13.51)

TCK   +32.40%   ($26.00, $34.41)

GTN   +26.9%   ($2.38, $3.02)

GNW   +21.7%   ($11.87, $14.45)

CENX   +9.9%   ($9.46, $10.40)

CNO   +9.1%   ($5.04, $5.50)

BPOP   +5.1%   ($2.75, $2.89) 

The S&P 500's return since 9/27/09:   +4.6%   (1044.38, 1092.04).

As you can see, all 10 Volume stocks have positive returns, and all 10 are outperforming S&P 500.

 

Let’s now move to The Volume Story 2.

Here are 6 new stocks that fit the Volume Story profile at this time:

 1.     GRT, Glimcher Realty Trust, Last Price $6.58, Increase in volume started in September of 2009.

Industry: REIT - Retail  

  

 

2.     ABCB, Ameris Bancorp, Last Price $9.96, Increase in volume started in April of 2010.

Industry: Regional – Mid-Atlantic Banks 

   

 

3.     HT, Hersha Hospitality Trust, Last Price $5.02, Increase in volume started in January of 2010.

      Industry: REIT – Retail

           

 

4.   CRUS, Cirrus Logic Inc, Last Price $17.14, Increase in volume started in May of 2010.

      Industry: Semiconductor - Specialized  

   

 

5.     HL, Hecla Mining Co, Last Price $5.61, Increase in volume started in September of 2009.

Industry: Silver

    

 

6.     IAG, IAMGOLD Corp, Last Price $17.84, Increase in volume started in September of 2009.

Industry: Gold 

   

 

There you have it. Two REITs, one bank, one tech stock, one silver miner, and one gold miner. A little something for everybody.

Let's now sit back and watch what happens. 

Disclaimer: Money doesn't grow on trees. Be careful out there…

14 Comments – Post Your Own

#1) On June 23, 2010 at 10:51 PM, Griffin416 (99.98) wrote:

Good post, I especially like your "I told you so" quote and link, friggin hilarious. I am well versed in technicals but never focused on volume much. Why a ten year time frame, wouldn't a 1-3 year give you a better head start? How do you find these, just random looking through 52 week high list or is there something specific you look for.

I see BAC had the volume spike very early in the rally, then faded, Citibank's volume is still volumunous, but kinda sideways action. BP's volume is like citibank, but dow. Sprint looks good but action is not straight up...I think I get what you are getting at

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#2) On June 24, 2010 at 12:05 AM, TMFUltraLong (99.97) wrote:

I'd take Cirrus Logic off your volume list.. you accidentally included a fundamentally sound company in your analysis.... =)

UltraLong

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#3) On June 24, 2010 at 12:39 AM, bigcat1969 (97.00) wrote:

Ever watch a football game where the first guy gets the tackle, then the next guy jumps in and third guy wants to his momma to see his jersey number so he jumps on until half the defensive team is piled up and a couple offensive guys plow in to defend the runner.  The pile gets bigger and bigger, but the ball player underneath ain't going anywhere.  Keep betting on how high the pile can go just remember there are only 22 guys on the field and eventually they have to get back off the pile.  Oh and the ballcarrier might not be in the best shape when they finally peel him off the ground.

Clever gambling strat, but investing...

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#4) On June 25, 2010 at 3:33 PM, dragonLZ (99.39) wrote:

 Griffin416, Thank you.

Most of the time I find these volume plays by looking at stocks that go up 3+% on higher than normal volume. Some I catch, some I miss. 

I picked 10-Y charts as those pretty much show my claim that these stocks have never before experienced volume this high. 1-3Y charts wouldn't tell the "whole" story.

BAC is definitely one of the volume plays, and I think it is a winner. Right now is just taking a breather after going from $3 up to $19. That's just normal.

C and S are nice volume plays too. C is taking a little more time than normal (which I don't like), but S looks like it will do just fine.

Good Luck!  :) 

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#5) On June 25, 2010 at 3:36 PM, dragonLZ (99.39) wrote:

I'd take Cirrus Logic off your volume list.. you accidentally included a fundamentally sound company in your analysis.... =)

 UltraLong, thanks for letting me know.

That pretty much tells me that CRUS will perform the worst from the whole list...

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#6) On June 25, 2010 at 3:44 PM, dragonLZ (99.39) wrote:

bigcat1969, you might be right, but I doubt it...

Show me a list of 10 stocks you made, with every single stock outperforming S&P, and I will trust your expertise in deciding which stocks are good gambling and which stocks are good investing choices. Fair enough? 

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#7) On June 25, 2010 at 4:30 PM, dragonLZ (99.39) wrote:

ABCB was up 17% today...

It looks like volume is still working... :)

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#8) On June 25, 2010 at 10:51 PM, Griffin416 (99.98) wrote:

I got the top bull pitch for BAC with 14 recs (whew woo), I like it too, just added more yesterday, everytime it goes back to $15, booyah.

I gotta look at this theory, my guess, like everything, it is right until it is wrong. I would buy these with stops. I do this type of thing in RL more, but in CAPS with that 7 days restriction I can not sell a stock if it loses its mojo.

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#9) On June 26, 2010 at 12:35 AM, dragonLZ (99.39) wrote:

What do you mean 14 recs? It's 15. :)

BAC is good. I like it. What people forget is that no stock can go forever. BAC went nowhere for a few months and people are already writing it off.

They forget BAC was among the early leaders of this bull market, and once the market starts going up again, BAC will once again be setting the pace.

BAC reminds me a lot of how AKAM behaved in the last bull market.

AKAM was an early leader as well and during 2003 went from $1 up to $15. Then it went nowhere for the whole 2004 and first half of 2005.

From July 2005 to January of 2007, AKAM went from $15 all the way up to $56.

Just saying...

 

 

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#10) On June 26, 2010 at 12:41 AM, dragonLZ (99.39) wrote:

Got to love this picture (and the Volume Story behind it)...

 

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#11) On June 26, 2010 at 10:59 AM, bothisellhigher (29.54) wrote:

I see your volume point, especially as a tip-off that a stock is in the process of "taking off."  BAC above is a decent example...looks like you could have been tipped off to buy in February 09...I'm interested to know what kind of volume would tip you off to the fact that the party's over and it's time to sell?

Again, BAC above appears to be settling down toward very low comparative volume...would you say it would be a good time to sell...now?

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#12) On July 07, 2010 at 7:50 PM, dare1182 (< 20) wrote:

can you update us on where your stock picks are today and how your volume theory came to be  : )

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#13) On July 09, 2010 at 4:13 PM, dragonLZ (99.39) wrote:

I can give you an update dare, no problem (anything for you, my friend):

Volume 1 stocks:

HWD +73%

GCI +58%

FITB +41%

LVS +33%

TCK +32%

GNW +23%

BPOP +7%

GTN +5%

CNO +5%

CENX +3%

S&P 500 return during the same time frame: +3% 

Volume 2 stocks are not doing that well, but keep in mind we had some very nasty down days lately (or in other words: give them some time):

ABCB +3%

CRUS +3%

IAG -5%

HT -7%

GRT -9%

HL -10%

S&P 500 -1%

 

Anything else? :)

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#14) On July 09, 2010 at 4:25 PM, dragonLZ (99.39) wrote:

I'm interested to know what kind of volume would tip you off to the fact that the party's over and it's time to sell?

bothisellhigher, high volume during a down month/quarter would mean SELL, just like high volume during an up month/quarter means BUY. (I'm not saying this is the way to do it, but that's how I look at it. Keep in mind I'm often wrong).

As for BAC, I wouldn't sell as the volume during the down (and side-ways) months is much lower that the volume BAC had during the up months. Take a look at the chart again.

That's also the reason why I don't buy the story that we are headed for the double-dip. None of the stocks from my Volume Story# 1 had higher volume during May/June of 2010 (serious down months) than the volume they had in March/April/May of 2009.

Just my opinion...   

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