Looking for Potential Sinkers in the SP 1500
Source: http://feedproxy.google.com/~r/qvmgroup/yrMF/~3/jckzF06qVIE/6396Posted on Friday, October 16th, 2009 | In Emerging Markets, Investing Lessons, Market Commentary
This is a practical follow-up to our recent article on volume as an indicator, and on divergence between volume and price action in particular.
We screened the S&P 1500 for stocks with rising prices and falling volumes. More specifically, we looked for stocks with “sinker” attributes:
- last closing price > 21-day simple moving average price
- positive 21-day price rate of change
- negative 21-day volume rate of change
- negative money flow (more vol. on down days than on up days)
We had the necessary data for 1470 of the 1500 stocks. Of those 104 met the sinker screening criteria as of end-of-day Oct. 15, 2009.
This image shows the 10 companies from that list with the greatest negative 21-day volume rate of change. (download spreadsheet of full list).
click image to enlarge
If you own any of the stocks on the screened list, look at them again fundamentally and technically to make sure you are OK with holding them. Don’t close a position based solely on these few criteria, but take note and do some more research to see if you should consider closing the position.
Note: We make no representation as to the quality of any company on this list or as to their probability of rising or falling in price. This is simply a screened list to potentially identify stocks for which short-term negative volume trend suggests short-term positive price trend may be heading for a reversal. You need to look further to see if any of those companies are future sinkers or current stinkers. All this list does is tell you that there is a divergence between the behavior of volume and price.
Disclosure: We are neither long nor short any company on this list.
Richard Shaw
QVM Group LLC
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Emerging Markets, Investing Lessons, Market Commentary, QVM Group LLC, Richard Shaw, S&P 1500
 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
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