One sector stands out with institutional accumulation going on in most of the top stocks – Aerospace & Defense. Notice that the recent rallies in the first three stocks below started on the same day back in October:
The volume patterns are typical of accumulation, where institutions build large positions over time.
An indicator I follow that helps identify accumulation is the Up/Down Volume Ratio, frequently referred to in Investor's Business Daily articles. Up/Down Volume Ratio is the ratio of total volume on up-closing days, divided by the total volume on down-closing days, over 50 trading sessions. A value > 1.0 usually indicates more buying than selling interest, and a value < 1.0 indicates greater selling. A value >= 1.3 typically shows up on stocks being accumulated by institutions.
The U/D ratio of the above four stocks:
If you are looking for an ETF to play the Defense industry, this articles covers the three possibilities: Play a Surging Defense Industry with These 3 ETFs
Of the three mentioned in the article, ITA and XAR look ready to break above resistance to new all-time highs, and PPA is close behind.
In today's Seasonal Forecaster newsletter I cover a trade setup on a Defense stock, expecting a 10+% gain within the next several weeks based on its track record. But I will not be surprised to see higher gains this year.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2015 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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