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Gains On Above Average Volume In 6 Of Past 7 Sessions - Wednesday, August 08, 2007
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 an ominous, as this usually signals distribution and further price deterioration are more likely to follow.
ITC Holdings Corp. (ITC +$1.55 or +3.18% to $47.14) surged into new high territory after reporting their third consecutive triple digit earnings increase! The gains it put up this week have offered a very reassuring sign of institutional buying demand (the "I" criteria). ITC was first featured in today's CANSLIM.net Mid Day Breakouts Report (read here) with a $46.52 pivot point and a $48.85 maximum buy price. ITC Holdings sports a very healthy Earnings Per Share (EPS) rating of 99 and a healthy Relative Strength (RS) rating of 82. The company has managed to increase its earnings at a healthy clip in each of the past four quarters, and well above the +25% guideline needed to satisfy the "C" criteria. ITC resides in the Utility- electric power group which is currently ranked 89th of out the 197 Industry Groups covered in the paper, placing outside of the much preferred top quartile needed to satisfy the "L" criteria.
On Wednesday, ITC jumped above its pivot point with gains and the necessary volume to trigger a proper technical buy signal. It ended in the middle of its intra-day trading range and still within 5% of its pivot point. It would be very encouraging to see ITC follow through in the days ahead with further gains on higher volume. As always, it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price.
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