Looking for Potential Sinkers in the S&P 1500

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 on than 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).

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.

Comments

[SeekingTruth:]

Richard, I read with great interest your splendid article :
VOLUME PERSPECTIVE ON US & CHINA ETF's and will study it at length over time , it's a "keeper" for sure.
Many thanks for responding to a reader request so well and quickly.
In at least a purely financial sense (really more), I am moved to think that SA could also be an abbreviation for :
"Saints Abound", which you have clearly demonstrated with this treasure trove of info about a subtle but hugely important subject.
I also agree completely with the article Summary and view's that you provided.
I'm also sure this article will get the attention and appreciation of those owning the listed stocks as well.
All I have to do now is dig in and enjoy!
Many Thanks again.

Oct 16 06:47 PM

[fatcat:]

Glad to know others appreciate Mr.Shaw...I have for years.

Wish I had listened more often...could have avoided some of the pain...oh,well...


On Oct 16 06:47 PM SeekingTruth wrote:

> Richard, I read with great interest your splendid article :
> VOLUME PERSPECTIVE ON US & CHINA ETF's and will study it at length
> over time , it's a "keeper" for sure.
> Many thanks for responding to a reader request so well and quickly.
>
> In at least a purely financial sense (really more), I am moved to
> think that SA could also be an abbreviation for :
> "Saints Abound", which you have clearly demonstrated with this treasure
> trove of info about a subtle but hugely important subject.
> I also agree completely with the article Summary and view's that
> you provided.
> I'm also sure this article will get the attention and appreciation
> of those owning the listed stocks as well.
> All I have to do now is dig in and enjoy!
> Many Thanks again.

Oct 19 02:35 AM