The Nasdaq finished Monday’s session with a gain of 1.6% in heavier volume than Friday. That combination of good price gains plus heavier trading has proven to be a good signal that a market uptrend may have legs. (I say may because the follow through works most of the time, although not every time. Still, every time you see a successful bull rally, you always have that follow-through day. So it’s 100% necessary, history shows.)
There was other good news for the indexes. The S&P 500 and the Dow also finished above their 50-day moving averages. Ideally, we’ll see a pick-up in volume on those indexes in the next few days.
So what does this mean? It means the environment for buying stocks may be safer, since the uptrend has been confirmed. Sometimes the rally fails quickly, by showing heavy-volume selling soon after the follow-through day. We’ll let you know if that occurs!
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