Is Accumulation Starting for This Stock?

While the S&P 500 closed at a new high, something the DJIA, NASDAQ Composite, and Russell 2000 failed to do on Friday, many quality stocks remain in limbo. What's an active, short-term trader to do?

You may have to spend more time on your chart scanning, going through your larger list of stocks you periodically check in on. Also, look over the stocks you had successful trades on, especially if it was at the same time of year.

One thing to look for is sudden volume spikes. Institutions are patient. If a stock is selling off, one that they have been considering adding to their portfolio, they will wait until the selling dies off. At some point they decide that they may not see the current prices for long. After all, if they are able to recognize value in a certain company, many other institutions may also be preparing to jump in.

So they start off accumulating the stock. They can't take a full position right away, or the Bid's will skyrocket. They will do an initial purchase, and if that works out, they will periodically add to their position.

While I wasn't coming up with much this weekend, one stock stood out with a large volume spike on Friday. I didn't see any news to account for it.

This particular stock has been in a slight downtrend. The company isn't in a sexy business, but the demand for their services is always there. So while other stocks have been seeing a larger pullback, this stock has been holding up pretty well.

What stood out was Friday's large volume bar on a strong up-close day. I did not see any news to account for this sudden jump. Volume fell off as the stock hit the May lows, and this strong volume on a rebound day strongly suggests institutional participation.

This stock has a strong seasonal pattern right now. Over the next 12 weeks, it has gained an average 10.1%, with losses in only 2 of the past 17 years.

Now I really like past performances. Last year, in the 6/28/2013 newsletter, I focused on this stock and its strong seasonal pattern. It had a good technical chart setup at the time. So I suggested an initial trade entry, and in the 8/5/2013 newsletter I returned with another new position trade (or add-to trade). The first trade gained as much as 8.7% over the next 16 trading days, and the second trade gained 4.7% getting to the October highs.

In today's Seasonal Forecaster I give the details on this stock, and the best ways to trade it right now.

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

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2014 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.

The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.

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