August 13, 2013:
Let’s start with an update on our Mondelez stock trade. Mondelez (MDLZ) closed today at 32.08, back above its breakout price.
I had written in an earlier post that I would sell the stock if it closed below 32, but only if the volume was higher than average. Well, yesterday’s close was below 32 but was on lower than average volume, so I did not sell. Low volume on a decline many times does not mean much in the bigger picture.
However, high volume selling means that the big institutions and mutual funds are selling, and stocks cannot make big moves without these big players propelling the stock with their huge buying power.
Using the volume indicator is important as it is a key tool to determining what the big players are doing. You want to be on the side of the big funds, and volume is your key to know if they are supporting or shorting your stock.
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