If you’re reading the financial news, you’ll be bombarded by headlines about tariffs, the strength of the U.S. dollar, interest rates, global conflict, and a whole host of other “market-moving” news. But at the end of the day, stocks go up and down based on one thing: trades.
The headlines don’t move share prices, buying and selling do. And it’s not our 100 or 200 (or even 500) shares at a time that’s doing it.
It’s the big investors who really drive the market.
If you run a hedge fund, an ETF, or a pension fund with $5 billion in assets and want to buy a 2% position in a stock, that’s $100 million worth of shares.
Depending on the stock, getting that big of a stake is likely going to take at least a few weeks, if not longer (otherwise a fund will run the price up on itself)—and then you multiply this by all the other funds (bigger or smaller) that also want in, and you can see how these funds can create trends up or down.
Yes, even institutional fund managers read the headlines, but if you want to know how they’re responding, you need to follow the trading volume.
I’ve found that dramatic trading volume clues in a particular stock (assuming it’s paired with decisive price action) is one of the best “tells” that big investors are grabbing or dumping shares, and therefore, that a stock might be starting a big run as that wave of buying or selling continues.
Of course, every stock will see volume pop on news (like earnings), but I like to look for truly out-of-the-ordinary trading volume and price gains—things like the biggest daily or weekly volume in at least a year (or longer) while the stock pops 15% or more, all while coming out of a big correction or consolidation.
Happily, I’m seeing many names that qualify of late.
One of the first was Amphenol (APH), a maker of a variety of interconnected products that play into the data center/AI infrastructure boom. After stalling out for months and going over the falls with the market, the stock saw two weekly buying volume bars that were the largest in more than five years! Shares have continued to march higher since, hitting new highs.
More recently, there are two names that have shown this that have caught my eye.
2 Stocks Flashing the Volume “Tell”
The first is Amer Sports (AS), which is a unique company—actually a conglomerate of 11 different sports brands, including some familiar names (like Louisville Slugger and Wilson). But the big growth is with its Acr’teryx (high-performance outdoor brand with a lot of climbing, skiing and alpine gear) and Salomon (also outdoor sports apparel and gear) brands, with the biggest growth in Asia. Of course, that meant tariff fears hit the stock very hard this year, but the comeback has been stunning, with the Q1 report capping it off: Not only did sales lift 23% and earnings rise 145% (crushing estimates), but the top brass said the tariff impact would be just a few cents per share this year.
The result: AS went vertical, rising 19% on its heaviest ever daily (and weekly) volume since coming public in February 2024. Shares are holding tightly in this range, too, despite the sale of some closely-held shares (non-dilutive) last month. It’s on my watch list.
The second idea is Veeva Systems (VEEV), which was a Top Pick in Cabot Top Ten Trader last month. Here’s what I wrote: “Veeva Systems is the hands-down leading cloud software provider to the life sciences industry, with a solution built from the ground-up many years ago to handle the intricacies of that business, starting with sales and marketing functions and expanding to everything from clinical trial management, tracking and reporting, regulatory submissions, safety and quality control aids, medical content creation, data analytics and much more. Of course, the latest growth angle could come from AI, which Veeva announced in April and will hit the market later this year: The firm sees two bots (one for CRM functions, one for commercial) launching around year-end, and aims to integrate AI into many parts of its suite, allowing many routine tasks to be automated and even allowing users to create customized automation tools too. To be fair, Veeva is a larger firm these days—it just crossed $3 billion of annualized run-rate revenue—so growth isn’t going to be off the charts, but the firm continues to execute and the top brass recently set a $6 billion run-rate goal by 2030, expecting continued mid-teens growth for many years to come. Q1 results were terrific, with total revenue rising 17%, marking an acceleration from recent quarters, while operating income lifted 34% (operating margin of 46%!) and earnings of $1.97 per share rose 31% and crushed estimates. It’s not changing the world, but Veeva is an emerging blue chip with a steady growth outlook, and if its AI products gain big adoption, there’s no reason results can’t continue to top estimates going forward.”
Shares proceeded to gap up 19% on earnings, with weekly volume the highest since the pandemic crash more than five years ago, all of which pushed the stock out of a huge trading range. It bodes well for the intermediate term—and, likely, longer term as well.
