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Volume is a vital component of technical analysis.  Prudent investors that incorporate volume into their stock analysis have often benefited several fold. Ideally, healthy stocks will more often tend to rise on higher volume and pullback on lighter volume.  Volume is a great proxy for institutional sponsorship.  Conversely, high volume declines can be ominous, as this usually signals distribution and further price deterioration are more likely to follow.

Harsco Corp. (HSC -$0.13 or -0.21% to $62.15) negatively reversed and closed near its intra-day low on Friday. The stock was first featured on Tuesday, April 18, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $42.32 pivot point (split adjusted). However, after a few short weeks the stock broke down under its 50-day moving average (DMA) line, a classic technical sell signal, then it spent the next 11 months building a new base.

More recently, on Friday December 7, 2007 HSC was featured again in the CANSLIM.net Mid Day Breakouts Report (read here) with an updated $61.90 pivot point and a $65.00 maximum buy price. The stock triggered a technical buy signal with a strong finish on Thursday (12/06/07), posting a solid gain for a new high with volume +63% above average satisfying the volume guideline.  The company sports a very strong Earnings Per Share (EPS) rating of 92. It is also encouraging to see the company earn a healthy Relative Strength (RS) rating of 91.  The company has managed to increase its earnings by well over the +25% guideline in each of the past three quarterly comparisons versus the year earlier. Harsco Corp resides in the Diversified Operations group which is currently ranked 23rd out of the 197 Industry Groups covered in the paper, satisfying the L criteria. The number of top-rated funds owning an interest rose from 147 in Dec '06 to 149 in Sept '07, which shows increasing institutional demand (the I criteria).  Concerns would be raised by any weakness leading to a close under its prior chart highs negating its breakout.  Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price.

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