William O’Neil’s How to Make in Stocks 5: CAN-SLIM’s “S”


This time marks the fifth installment of William O’Neil’s Growth Stock Discovery Series. For those who missed the previous articles, please take a moment to read them through the following link:

I would recommend purchasing William O’Neil’s book to thoroughly understand the details of his investment methodology.

CAN-SLIM’s “S”: Supply and Demand

The best approach to understanding stock demand and supply is to observe daily trading volume.

Typically, when stock prices temporarily decline and this is accompanied by a decrease in trading volume, it indicates that significant selling pressure has been exhausted. Conversely, during a stock price increase, an increase in trading volume suggests institutional buying activity.

When a stock price breaks out from a consolidation phase, it is desirable for the trading volume to be at least 40-50% higher than the usual volume. Sometimes, a more than 100% increase in trading volume within a day can indicate substantial buying or expectations of a price increase.

Charting stock base patterns and observing them weekly, particularly monitoring weekly changes in stock prices and trading volume leading up to a breakout from the base pattern, can be beneficial.

Checking the weekly movements of stock prices and changes in trading volume, as well as whether the closing price is near the high or low range, is crucial in this context.