Study the “On-Balance-Volume” indicator.
Any good stock market software will include computer indicators. Some applications have literally hundreds of these indicators. In my experience most of these indicators have very little practical use and do not lead to trading success. After many years I have found that I only need one indicator, on-balance-volume. In fact if I did not have that particular indicator I would not trade. On-balance-volume is absolutely invaluable.
I have a rule: If on-balance-volume is not either steady or rising then I will not purchase the stock.
The markets gives you five important pieces of information each day, the opening price, the high and low price for the day and the closing price. These prices are important bits of information with the closing price being the most important. Prices measure the value of each share in a company.
The fifth and most important information is the volume traded. This can tell you as much if not more than the price because volume is a measure of the emotion behind the price movement and I feel that understanding the emotion of shareholders is more important than the price. High volume on an up day is usually a bullish sign. High volume on a down day is bearish.
Rising volume and rising prices is generally a sure sign of a very bullish stock. Rising on-balance-volume confirms this.
Price is a measure of value whereas volume is a measure of emotion