Page 200 - THE MARKET WHISPERER

196 PART 7 - Indicators: The Trader’s Compass

signs assisting us in deciding whether to hold the stock. A stock not
showing a volume increase will generally encounter intraday institutional
sellers for up to three days from the breakout. Institutional supply will
create a new area of resistance which the stock will find hard to break.

Breakout Volume Increase for Caterpillar, CAT

In the daily chart on the right, you can see how Caterpillar broke to a
new daily high of over $80. You can also see, at the base of the chart, that
the breakout involved almost double the volume of that of the preceding
days. On the left, the intraday chart shows how the stock consolidates
below $80, and when it breaks the resistance, volume jumps to 1.2 million
shares in just one single five-minute candle! Without a doubt, a lot of
interest was shown in this stock, which increases its chances of continuing
to trend up. Caterpillar’s potential breakout was identified in the trading
room several days before the actual jump, and we followed it closely in the

hope of buying at breakout. This trade was definitely a highlight.

SMART Funds hold stocks for the long term and are therefore not
MONEY sensitive to intraday price changes. Traders buying before
the intraday breakout are highly sensitive to even the
slightest price change.