Let’s look at three recent powerhouses that have been strongly pushing their way higher on less and less volume, which serves as a non-confirmation of higher prices.

First, Potash (POT):

This darling fertilizer stock which has been so strong through 2007 to present is now forming a potential blow-off top.  Volume surged as price also surged and then on the current swing higher, volume markedly has declined.  Though the chart remains in a superior uptrend, the sharp decline in volume is a warning sign.

Next, Urban Outfitters (URBN):

It is extremely rare to see a stock show this kind of almost perfect up-trending rising channel line, which gives a clean picture of where the stock is likely headed next (ease of entries and stop-loss management).

I would be less concerned of this stock reversing because it has yet to show a type of ‘blow-off’ euphoria, but higher prices are not yet being confirmed by volume (as prices drift higher, volume drifts lower).  Let’s keep a watch on this one.

Finally, CSX Corp. (CSX)

CSX is a railroad/transportation company that has been in the news lately.  The stock has recently surged to new highs (and is making one intraday) yet a both a volume and a momentum divergence have transpired.

I also wanted to show this chart to demonstrate how the rising 20 period moving average serves as key support and allows you to enter new positions into a trending market.

I found these stocks through technical scans at the Market Club - be sure to check it out and consider joining for more information and analysis.

Watch the stock prices but always try to listen to the “Voices of Volume” for a deeper understanding of what may occur next.