Technicals
Most technical analysts agree that the most important thing to monitor when buying or selling stocks is the price chart. A close second is volume. In fact, most technicians believe that price and volume go hand-in-hand when it comes time to enter and exit a stock position.
Volume is simply the number of shares of stock traded in a period, usually a day. A large increase in volume means that some sort of news may be brewing. Increasing volume indicates a trend may stay in place, while decreasing indicates that there may be a reversal of the trend.
In trending trades, volume will confirm the trend by moving steadily higher. If volume diverges from the price trend, the trend could be slowing or coming to an end. In breakout trades, the volume spike will confirm the breakout.
Volume info by BetterTrades Charts
It's often been said that volume confirms the price, because volume shows the level of institutional involvement. That's important because mutual funds and trusts account for more than half of the trading volume. A big volume spike means the big sellers have conviction about the price move and are interested in seeing it continue. The average sellers can't do much to influence direction, so it's better to hop on for the ride.
