How a Stock's Volume Can Affect Its Price

Investing in stocks used to be a bit of an ordeal, with investors having to go into brokerage firms such as Charles Schwab or Scottrade and sit down with a broker in order to make a trade.

Fast forward to 2020, and the advent of smartphones and apps like Robinhood have made commission-free trading a breeze for investors of all ability levels. Combined with the economic slowdown caused by the COVID-19 pandemic, and a record number of retail investors have started trying their hands at day trading stocks.

While the convenience of at-home trading is an exciting way for investors to make some money and build their wealth, simply having the ability to trade stocks does not make someone a professional. In order to enter into profitable trades, investors must understand how to analyze stocks.

Due to the frequency of making trades, the day trader will be less concerned with analyzing a stock’s fundamentals, such as its free cash flow, price-to-earnings ratio, and debt-to-asset ratio, as he or she will be in performing technical analysis on a stock’s price trend. By looking at charts and understanding technical patterns and indicators, day traders can make tidy profits in one day, even when trading companies that are fundamentally weak.

Why The Market Continues To Blast Higher

For those who are baffled by the rising Stock Market, the video below created by CNBC is an excellent explanation of what exactly is going on. 

New Leaders Are Emerging In The Stock Market

As the coronavirus continues to destroy the economy, trends have ended and new ones have emerged. In the stock market, there is a new leader: Data Dog ($DDOG) a cloud company. The company dazzled in earnings, which showed a very powerful breakout in its stock chart. Take a look at the RSI indicator above, showing pure strength, and a beautiful gap up making new all-time highs. This is not the only cloud company that broke out as Twillo ($TWLO) and Fastly ($FSLY) broke out as well.

The cleaner chart, in my opinion, is $DDOG, which I believe should be bought on weakness, look for this stock to continue higher in the upcoming months.