Signs of Strong Hands Emerging

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“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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5 Responses to “Signs of Strong Hands Emerging”

  1. hey is that vid the government or george n jane? i also look for volume spikes and price conformation.

  2. Ha. The Jetsons! Slightly different spousal cash exchange than in Goodfellas ;)

  3. Big money has been getting long paper names on whispers of a price increase in containerboard for a few weeks now. Kapstone announced that price increase late last week and most other integrated players have followed or are expected to. Too much long/short play from HFs to get over extended, IMO – not to mention macro concerns with China. Not hating on the analysis or being a degenerate short seller, but I am quite close to the story and I believe it is a lot of HFs going long BZ while patiently shorting corrugated exposed names like RKT who will get a lot of sell side hype with the price increase and likely miss earnings in 2H12. People are drastically overestimating the effects of a price increase and I’m surprised there hasn’t been more weakness in IP/PKG/RKT. If you go long, I would
    go short one of the afore mentioned names but hell, what do I know.

  4. […] this blog post from the summer where I noted bullish signs of accumulation (buyers of size methodically legging […]

Comments are closed.
Previous Posts by chessNwine

Signs of Strong Hands Emerging

724 views

“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. 

____________________________________

____________________________________

5 Responses to “Signs of Strong Hands Emerging”

  1. hey is that vid the government or george n jane? i also look for volume spikes and price conformation.

  2. Ha. The Jetsons! Slightly different spousal cash exchange than in Goodfellas ;)

  3. Big money has been getting long paper names on whispers of a price increase in containerboard for a few weeks now. Kapstone announced that price increase late last week and most other integrated players have followed or are expected to. Too much long/short play from HFs to get over extended, IMO – not to mention macro concerns with China. Not hating on the analysis or being a degenerate short seller, but I am quite close to the story and I believe it is a lot of HFs going long BZ while patiently shorting corrugated exposed names like RKT who will get a lot of sell side hype with the price increase and likely miss earnings in 2H12. People are drastically overestimating the effects of a price increase and I’m surprised there hasn’t been more weakness in IP/PKG/RKT. If you go long, I would
    go short one of the afore mentioned names but hell, what do I know.

  4. […] this blog post from the summer where I noted bullish signs of accumulation (buyers of size methodically legging […]

Comments are closed.