V.14:12 (515-519): Float Analysis by Steve Woods and Jan Arps

Float Analysis by Steve Woods and Jan Arps

Here's a close look at the turnover of a stock's float, based on an idea from the works of W.D. Gann, that reveals some dramatic patterns and expands the definition of a base or consolidation zone.

The floating supply of shares - or simply, float - is all of the shares actually available for trading by the public that are not owned by the company's management. This number can be incorporated into an understanding of the direct relationship between the stock price and its volume of shares traded. This is easily seen when a backward cumulative count of the volume is studied in relation to a stock's floating supply of shares. What emerges from this analysis are price-volume patterns that clearly show stocks forming bottoms, bases in a rising trend, and tops, as well as giving buy and sell signals. To understand this relationship between price and volume and see its powerful implications, one must understand the term float analysis.

The turnover of the float is the approximate time it takes for the float to change ownership. For example, if a stock's float has 50 million shares actively trading and the volume for the last four weeks was exactly 50 million shares, then the float's turnover would be a four-week span starting from the current date and going back to the day when a cumulative total of the volume equaled 50 million shares.