EarningsBeats Digest

Published: Fri, 09/17/21

EarningsBeats.com Digest for September 17, 2021

A Breakout is Best with Confirming Volume

I don't trust stocks that consolidate for months, only to break out with lackluster volume. For a breakout to be truly meaningful, I want much heavier volume than usual to accompany it. For today's EB Digest, I wanted to explain what I mean by "confirming volume". Sometimes you can simply look at a chart and see that the volume bar is much higher than what is normally traded. As an example, look at Avis Budget Group (CAR):

Its volume was 4 million shares after clearing resistance in a bullish cup with handle pattern. I think it's rather evident that Thursday's volume was very heavy on a relative basis. Pattern measurements can be used for price targets, but I'd only consider those patterns if confirmed by a heavy volume breakout like the one CAR saw yesterday. The measurement of this pattern is from the top of the cup to the bottom. For CAR, that's nearly 30 bucks. So Thursday's breakout above 95 "measures" to a price target of roughly 125.

Happy Trading!

Tom Bowley
Chief Market Strategist

EarningsBeats.com
Better Timing. Better Trades.