Introduction:
This graph is a scatter plot presenting volume analysis for the Johannesburg Stock Exchange (JSE).
The horizontal axis (x-axis) represents the "Volume multiple of the last 200 trading days", indicating how much the volume of the day’s trading compares to the average of the last 200 days. A value of 1 would mean the volume is equal to the 200-day average, values greater than 1 mean more than average volume, and values less than 1 mean less than average volume.
The vertical axis (y-axis) shows the "Percentage daily change", which represents the percentage change in the share price compared to the previous day. Positive values indicate an increase in share price, while negative values indicate a decrease.
The points on the graph are labelled with ticker symbols representing different companies. Points above the horizontal axis represent shares that have increased in price, and points below it represent shares that have decreased in price.
Similarly, points to the right of the vertical axis represent shares with higher trading volumes than the average, and points to the left represent shares with lower-than-average trading volumes.
Interpretation:
Shares in the upper right quadrant (green dots) could be considered strong performers as they are experiencing both a high volume of trading and an increase in price. This could indicate positive investor sentiment and possibly a good buying opportunity if the momentum is expected to continue.
Shares in the lower right quadrant (red dots) might be experiencing a high volume of trades but are decreasing in price. This could signal a selling pressure or negative sentiment, and investors might want to investigate further before making a decision, as they could represent either a potential for buying at a lower price (if the fundamentals are solid) or a risk if the price continues to decline.
Shares in the lower left quadrant (red dots) are seeing both lower volumes and a decrease in price, which could be a sign of weak investor interest or a negative outlook, suggesting caution.
Shares in the upper left quadrant (green dots) are experiencing an increase in price despite trading at lower volumes, which could indicate undervalued opportunities but also might suggest lower confidence among investors, thus these would require careful analysis.
Before making any investment decisions, it is important to consider other factors beyond just the volume and price change. These can include fundamental analysis of the company's financial health, news, industry trends, and overall market conditions. Additionally, past performance is not necessarily indicative of future results. Always conduct thorough research.