here is an intersting take on why volume is important and price secondary..
It is a good point..
Price is important but it's relation to Volume should be emphasized..
motorway
from Theodore Modis
An S-Shaped Trail to Wall Street - Survival of the Fittest Reigns at the Stock Market, (Growth Dynamics), Geneva, Switzerland
Under the assumption that competition (Darwinian in nature) reigns in the stock market, we can analyze the growth of company stocks as if they were species competing for investors' resources. The approach requires the study of the dollar value and the share volume daily exchanged at the stock market. the object of most studies at the stock market continues to be the squiggly charts of stock prices, and market indices. These indicators do not constitute competition variables because they do not represent limited resources. The fact that the IBM stock goes up does not prevent the AT&T stock from also going up. Competition emerges only when we deal with a limited resource and one competitor's acquisition entails another competitor's nonownership.
The amount of dollars (value) and the number of shares (volume) exchanging hands daily, constitute limited resources. The money spent in buying one stock is no longer available for acquiring another stock. Similarly, once an investor buys a share, this share is no longer available to other investors.
The daily volume reflects the attention investors paid to that stock that day. Active stocks sometimes attract considerable attention even from non-investors. They receive special mention and may be highlighted in more than one article in the daily newspaper. The value exchanged over a company's stock in a day is less visible but unquestionably reflects the extent to which the stock tied up investors' dollars that day. If money and attention go to one stock, they do not go to other stocks. Unlike price, these variables do represent limited resources.
Volume and value obey the law of competition directly. Prices come into the picture only indirectly, and so do the various price-based indices. Many analysts and forecasters have long slaved over curves and historical data searching for structures, periodicities, waves, or other observations that would help anticipate future patterns. Patterns in the evolution of prices sometimes correlate with patterns in the evolution of the share volume and the dollar value
There are two kinds of competition at the stock market , competition for dollars (value) and competition for attention (volume). The two kinds of competition serve like two dimensions which taken together constitute a powerful instrument for understanding the behavior of stocks in the future. Like stereoscopic vision that permits one to focus at a certain depth in space, one also needs two different points of view to see clearly at a certain depth in time.
