Some older friends told me about phone service in our community. You’d crank-up Mary, the phone operator. You’d say, “Mary, connect me to my Mom and Dad.” While waiting, Mary would bring you up-to-date on what’s happening in Town. Nothing like, “Jay’s horse got loose yesterday.” No, this would be juicy stuff about so-and-so leaving someone’s house in the morning shadows.
Mary’s gossip created a buzz in Town, but she may have missed the facts. Presumably, financial news comes close to plain and clear reporting with a hint of speculative prognostication. We don’t want Mary’s journalistic methods informing us about the stock or bond markets.

Investor’s Business Daily, in my opinion, offers clear data supported by distinct technical data. William O’Neill learned by watching institutional investors (mutual funds, pension plans, and institutional private money managers). IBD applies that growing body of knowledge to current market events.

Trading volume may be one of the most important, but not the only important, market actions. Others worth considering:

• Trading patterns,
• Changing market leadership,
• Support and resistance lines
• Relative strength
• Earnings and sales momentum

One of my favorite resources is the “Daily Stock Analysis” video (about 1/3 of the way down the page). Watch it, and you’ll develop insights about how markets and individual stock market pricing changes.

Some times the stock market takes off like a rocket. Yesterday (March 18,2008) was one of those days. The Dow Jones Industrial Average closed with the 4th highest one day gain in the history of the index. I get excited when the market goes up like that. My tendency is to be optimistic, yesterday does not give me many reasons for a party.

You need a lot of people to make a stock market party. Yesterday everyone was invited, but only a few came. Stocks must move up on strong volume with confirmation over at least 6 to 10 days of market action (not necessarily in a row). Yesterday was not convincing because the trading volume was not there.

You can get a further sense of stock leaders by their trading volume too. If they show price gains without exceeding their average daily volume, you have an invitation, but not a party.

You can learn more about the market’s activity by listening to the daily audio report posted on the home page of the Investor’s Business Daily web site. You will learn some technical or chart pattern pointers, and get a sense of market direction, if this is important to you.

Most of us tolerate asset allocation portfolios better than individual stock portfolios. Knowing where the market is going gives you insight and confidence about your investments.