Seek Stocks That Show Evidence Of Heavy Institutional Demand.(B)(INVESTOR'S CORNER)

Byline: CHRISTINA WISE

One of the most basic economic principles is the law of supply and demand. One of the places its power is most sharply demonstrated is in the stock market.

There, strong demand in the face of skimpy supply of available shares will power a stock's price northward. Conversely, an oversupply of shares and weak demand will cause it to sag.

Supply also serves as the S in CAN SLIM. To track supply and demand for a stock, look at the volume percentage change column in the stock tables. It shows you how a stock's trading volume that day compares to its average over the past 50 days.

Ideally, you want to see volume swell during big moves ahead, such as the breakout from a sound base. A stock that breaks out on volume that's at least 50% or more above its average is usually demonstrating it has the power to make bigger gains.

Institutional buyers, such as mutual funds and hedge funds, represent perhaps the most important kind of demand. Because of their size, their buying and selling decisions can determine a stock's fate.

IBD's Accumulation/Distribution Rating helps you track whether they're buying or selling a stock. The rating, which is listed in IBD's stock tables and also on the Web at IBD Stock Checkup, is ...