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Thinking About Buying or Selling Apple? Don't Look at Volume


Here's why volume is not a good buy/sell indicator.

MINYANVILLE ORIGINAL Don't look at volume when determining whether to buy or sell Apple (NASDAQ:AAPL). At, we rarely look at volume. (For our Buy/Sell recommendation on Apple, please see our article from October 9, Apple No Longer a Strong Buy?)

Volume is not a good indicator to determine if you should buy or sell a stock. Why? Because if you sold Apple any time in the last five years based on heavy volume and the stock being down, you would have missed out on further price appreciation.
Traders typically think that if the stock is up on heavy volume, that's good, and if the stock is down on heavy volume, that's bad. We are just looking at the historical volume over five years and saying we saw a 45% increase in volume and the stock was up or down with that increase.
As a case in point, the stock was down yesterday with increased historical volume over 45% and the stock is up today.

Here's the breakdown as illustrated in the chart below. Apple yesterday saw a 47.68% increase in its historical five-year volume and was down on this increase in volume. In the chart you will see the red boxes indicating every time Apple saw a greater than 45% increase in its five-year historical volume on a down price day. Now for the kicker: The stock, after seeing this increase in historical volume, was up on average .68% after five days and 4.32% after 30 days.

Click to enlarge

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No positions in stocks mentioned.
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