Volume can be a useful tool in determining a change in trend for the overall market and even for individual stocks.

If buying interest is high, so, too, will be volume in the market and individual stocks. Conversely, if investors are on a "buyers strike," volume in the market will decline.

Since the stock market, like any other market, moves based on supply and demand factors, you cannot have a sustainable upward trend in the market without strong buying, which is another way of saying that rising markets need rising volume.

As a rule of thumb, you want to see volume confirm the price trend. In other words, during bull markets, you want to see volume rise on up days and decline on down days.

The same can be said for individual stocks. You want to see volume rise on days when the stock goes up. On down days, you want to see volume decline.

A change in the trend can often be foreshadowed by volume indications. For example, if volume begins to decline as the market rises, it could be a signal that buying power is starting to wane and the market's near-term trend may be shifting. Also, if down days in the market begin to be accompanied by heavy volume, and rallies see only light volume, the volume numbers could be indicating that the market is getting tired and that further weakness is in store.

Conversely, downward trends in the market are often halted by a surge in volume during a market rally.

One final point about volume is worth mentioning. When I first started in this business, a huge volume day was 100 million shares traded. Today, it is not uncommon for one billion shares or more to be traded on the New York Stock Exchange and Nasdaq market. Thus, evaluate volume trends based on relative volume numbers, not absolute volume numbers.