Zacks.com featured expert Kevin Matras highlights: NIC, Inc., Formfactor, Inc., MDC Holdings, Inc., Marten Transport, Ltd. and The Travelers Co.

Stocks highlighted in this article are: NIC, Inc. (EGOV - Snapshot Report), Formfactor, Inc. (FORM - Analyst Report), MDC Holdings, Inc. (MDC - Snapshot Report), Marten Transport, Ltd. (MRTN - Snapshot Report) and The Travelers Co. (TRV - Analyst Report).

The rally in the major indexes over the last 3 weeks has been quite inspiring and has provided the most recent ray of hope that we could be getting closer to coming out of this mess.

However, I've noticed that the last half of this 20+% rally was made on declining volume.

Not only does this show up on the major indexes, but on lots of individual stocks as well.

And while the volumes for the indexes were mostly above average to average, just the mere fact that volume was dropping at all during this run-up suggests a lack of conviction and supportive demand.

But volume indeed was downright light on plenty of individual stocks.

It may also explain the weakening of the rally late last week and early this week.

And while I still believe there's more to be seen on the upside, a jump in volume will make me feel all the better about it.

The whole idea behind wanting to see increased volume is because price should follow volume.

If a stock is rising on increasing volume, it can be a sign that new buyers are coming in and some short sellers may be giving up.

(I'm sure we saw a lot of that at the beginning.)

But rising prices on decreasing volume suggests a lack of new buyers and waning underlying pressure.

Just as a ball on top of a hose needs more and more water pressure to push it higher; the same is true to an extent in the markets.

Once you let up on that water pressure, the ball will fall back down. And when buying demand eases up, so too will the market.

So in this week's screen I'm searching for stocks with increasing volume over the last couple of weeks. Not just a couple of days, but weeks.

This helps me see true demand that seems to be building over time. There may be an occasional light day here and there, but in total, I want to see it growing week by week.

And while there are plenty of stocks that fail to meet this criteria, there are lots of really great stocks that do.

The parameters to the screen I'm running this week are as follows:

• Price >= $5
  
• Volume (avg. 20 day) >= 100,000
  
• Zacks Rank <= 3
  
• Projected 12 month Growth Rate > 0

• Recent Week’s Price > Price from 1 Week Ago
  
• Price from 1 Week Ago > Price from 2 Week’s Ago

• Weekly Volume > Weekly Volume from 1 Week Ago
  
• Weekly Volume from 1 Week Ago > Weekly Volume from 2 Week’s Ago

For those using the Research Wizard, here's what the Price and Volume parameters look like. (The Price components (i6) and Volume components (i7) were done using the DBWP – Historical Weekly Prices database.)

Here are 5 stocks that made it thru this week's screen for 3/31/09:

EGOV - Snapshot Report NIC, Inc.
FORM - Analyst Report Formfactor, Inc.
MDC - Snapshot Report MDC Holdings, Inc.
MRTN - Snapshot Report Marten Transport, Ltd.
TRV - Analyst Report The Travelers Co.

Get the rest of the stocks on this list and start screening for these companies on your own.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Read the full analyst report on EGOV

Read the full analyst report on FORM

Read the full analyst report on MDC

Read the full analyst report on MRTN

Read the full analyst report on TRV