What Is a Most Active List?
A most active list is a listing of stocks with the highest
trading volumes on a specific exchange over a defined period, generally one
day. The volume
of trade measures the total number of shares that have been
transacted for a specific security during a specific time period, with higher
trade volumes for securities generally signifying higher liquidity, better
order execution, and a more active market for connecting buyers and sellers.
How a Most Active List Works
The most active list can include stocks that have had both
positive or negative price changes and sometimes can even include stocks with
an overall price change that has been close to zero.
In a bull market, the majority of the stocks on the most
active list will have positive price changes, although there will be some
trading lower, perhaps due to company or sector-specific news. On the other
hand, in a bear market, the most active list will mostly include stocks with
negative price changes; however, there will be occasional standouts to the
upside, especially defensive plays.
Indexes and exchanges usually have a list of their most
active stocks for the day as well as their most declined stocks
for the day. These lists have other nicknames as well, such as winners and
losers or hot and cold stocks. Often, these lists will include further details
and categorization, such as lists of most active stocks by share volume and
most active by dollar volume.
Financial analysts will sometimes compile daily data from
most active lists into monthly or yearly reports, which list the highest-traded
stocks over the course of that period of time.
Reasons for Appearing on a Most Active List
The most active lists in the U.S. and Canada generally are
made up of the most widely followed stocks on their benchmark indexes, such as
the Dow Jones Industrial Average and S&P 500 in the U.S. and the
TSX/S&P Composite Index in Canada.
Sometimes, when companies have some important information
released, such as quarterly results, this will result in higher-than-usual
trading volumes and an appearance on the most active list.
During the quarterly reporting period, unfamiliar names can
appear on the most active list. This is often because these stocks have either
exceeded or missed earnings estimates, which results in higher than usual
trading volumes.
Market analysts turn to the most active list and information
it provides about trade volume to help them determine whether a market is in
bull or bear mode.
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