Sometimes when a stock goes through heavy distribution, it will establish a direction on low volume. I call this “Drifting”. When buyers and sellers heavily participate in a counter which results in a flat position at the end of the day, sharks like to move on the basis that most people who want to trade that counter have already done so and won’t be interested until the next support / resistance is broken. Brokers in developed markets especially like to do this because they can see stop orders and know that there will be no interest in a counter until the price starts to hit that level. If you’re quick, it is sometimes possible to ride along with these movements.
Take a look at the KLCI, which has been moving up on low volume after a distribution. Initially I mistrusted the move due to lack of volume, but as an adept trader I should have taken this signal.
Here’s another counter I am interested in. Shell got whacked along with oil prices, but like Tengku Razaleigh, I am still bullish on oil and have more faith that this will help the Malaysian economy than palm oil. After heavy distribution this counter has started to drift up. 2 good reasons to make this my entry.
