Big moves up and down in share prices need to be supported by increasing volume or the move will rarely be sustainable. One way to determine strong trends and get on board long upward or downward moves is to look at stocks that are trading a large amount of volume early on in the day, when compared with their average volume. This will help us set the best moves apart from the rest. (For background reading, see Volume Rate Of Change.)

Here are five stocks that were trading on very large volume by noon today. Let's take a closer look at one that has seen a large share price change as well.

Company Shares Traded* % of Average Volume
(3 month)
Washington Mutual
4,464,383 N/A
Chimera Investment
1,898,700 439%
Conexant Systems
662,458 140%
Clearwire Corp
900,293 133%
American Commercial Lines
1,030,318 122%
* Data as of 10:00 am EST September 30, 2008

Crowning The King of Cash
JPMorgan Chase(NYSE:JPM) is touting its position of safety in the marketplace by claiming the No.1 spot among U.S. banks in terms of deposits. WaMu customer deposits, checking accounts and certificates of deposit have become the property of JPMorgan as of September 25, forming a depository bank with more than $2 trillion in assets. The news of JPMorgan's conquest over WaMu was only days ahead of Citigroup's announcement of its absorption of Wachovia Bank (NYSE:WB). The combined branches of WaMu and JPMorgan will give customers the option to visit more than 5,400 branches and have access to more than 14,000 ATMs in 23 states. The hyper activity in WaMu shares could be investors hoping to remove remaining shares from their portfolios.

What Happened to WaMu?
The financial Tsunami in the form of a slowing U.S. economy, a reversal of the housing boom, limited availability of credit and a rise in home foreclosures weighed heavily on WaMu's balance sheet. At the end of the second quarter of 2008 WaMu reported a net loss of $3.33 billion and an increase in loan loss reserves to $8.46 billion in preparation for an expected continuation of falling housing prices in the U.S. WaMu also reported more than $11 billion in non-performing assets tied largely to option ARM loans and its subprime mortgage channel. In the days leading up the merger announcement, rating agencies Standard & Poor's, Moody's and Fitch Ratings all lowered their bond ratings for the ailing depositor and mortgage loan provider. (To learn more, read What is a subprime mortgage? and The Fuel That Fed The Subprime Meltdown.)

What Happened to the $7 Billion Cash Infusion?
Earlier this year Private Equity firm Texas Pacific Group, who has successful teamed with other firms to complete huge deals like the $45 billion leveraged buyout of Texas Utilities and the $27 billion acquisition of Alltel Wireless, led a $7 billion cash infusion into WaMu. Former CEO Kerry Killinger hoped that the infusion of funds along with additional cost savings measures would be enough to keep WaMu solvent. With the transfer of WaMu assets to JPMorgan the private equity firm that is often on the winning side of a deal is reported to have lost $1.35 billion on the transaction.

Heads Up
Note to depositors. If you had more than $100,000 on deposit at each of the two formerly separate entities your deposits will continue to be secured separately for the next six months. After the six-month period normal FDIC insurance up to $100,000 per depositor will go into effect. (To learn more, see Are Your Bank Deposits Insured?)

What happens Next
The upswing in volume is unlikely to continue as the shares WaMu will cease to exist. After the announcement JPMorgan immediately moved to write down $30 billion in WaMu mortgages and it will begin working on capitalizing its new $900 billion in deposits. Unusual volatility that could lead to investment opportunities may exist with JPMorgan's stock. On September 26, shares of JP Morgan rose 9.91% on news of the announced acquisition only to fall 15% on September 29 as the government bailout plan was rejected by Congress.

Related Articles
  1. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  2. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  3. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  4. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  5. Investing Basics

    Top Tips for Diversifying with Exotic Currencies

    Is there an opportunity in exotic currencies right now, or are you safer sticking to the major ones?
  6. Mutual Funds & ETFs

    The 3 Biggest Mutual Fund Companies in the US

    Compare and contrast the rise of America's big three institutional asset managers: BlackRock Funds, The Vanguard Group and State Street Global Advisors.
  7. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  8. Professionals

    5 Top-Rated Funds for Your Retirement Portfolio

    Mutual funds are a good choice for emotional investors. Here are five popular funds to consider.
  9. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  10. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!