| July 19th, 2021 Buying Pressure Moves WM Higher Dear Reader, On Friday, we looked at a Daily Price Chart of Apple Inc., noting the stock’s 12/26 Day MACD is above the 9-Day EMA signaling a bullish trend for the stock. For today’s Trade of the Day we will be looking at an On Balance Volume chart for Waste Management, Inc. stock symbol: WM. Before breaking down WM’s OBV chart let’s first review which products and services are offered by the company. Waste Management, Inc., through its subsidiaries, provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns, develops, and operates landfill gas-to-energy facilities in the United States, as well as owns and operates transfer stations. Confirming a Price Uptrend with OBV The WM daily price chart below shows that WM is in a price uptrend as the current price is above the price WM traded at six months ago (circled). The On Balance Volume chart is below the daily chart. On Balance Volume measures volume flow with a single Easy-to-Read Line. Volume flow precedes price movement and helps sustain the price uptrend. When a stock closes up, volume is added to the line. When a stock closes down, volume is subtracted from the line. A cumulative total of these additions and subtractions form the OBV line. On Balance Volume Indicator ● When Close is Up, Volume is Added ● When Close is Down, Volume is Subtracted ● A Cumulative Total of Additions and Subtractions form the OBV Line Volume flow precedes price and is the key to measuring the validity and sustainability of a price trend. We can see from the OBV chart below that the On Balance Volume line for WM is sloping up. An up-sloping line indicates that the volume is heavier on up days and buying pressure is exceeding selling pressure. Buying pressure must continue to exceed selling pressure in order to sustain a price uptrend. So, On Balance Volume is a simple indicator to use that confirms the price uptrend and its sustainability. The numerical value of the On Balance Volume line is not important. We simply want to see an up-sloping line to confirm a price up trend. 
Confirmed ‘Buy’ Signal for WM Since WM's OBV line is sloping up, the most likely future price movement for WM is up, making WM a good candidate for a stock purchase or a call option purchase. Let's use the Hughes Optioneering calculator to look at the potential returns for a WM call option purchase. The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat WM price to a 12.5% increase. The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following WM option example, we used the 1% Rule to select the WM option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation. | 
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