“Accumulation” is the process of buyers gaining control from sellers after a prior corrective or bearish trend of lower highs and lower lows. Observing the volume pattern on daily and weekly timeframes is one tool at your disposal in attempting to identify signs of accumulation. Strong signs of accumulation raises the specter of a major reversal in trend.

However, price is king and must make progress in conjunction with volume. Moreover, the accumulation process can be a rocky one in terms of the price swings that take place, meaning just because you may very well have correctly identified an accumulation process, it does not necessarily follow that you should plunge back into any security or the broad market all at once.

Two issues to consider as examples of “strong hands” stepping in after a corrective period are BZ and HHC, both intriguing firms on the fundaments side, also in terms of their respective sectors. While I expect anything but smooth sailing higher from here as there is more work to be done to confirm a fresh uptrend, both volume patterns are compelling enough, in conjunction with improved price action, to warrant your attention.

Disclosure: I am currently long HHC inside the 12631 Trading Service. 

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