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.

This entry was posted on Wednesday, March 19th, 2008 at 5:37 pm and is filed under Investing, Stock Market, stock market volume, stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.