The Market Stages A Comeback as Volume Climbs

Stocks managed to stage an impressive rebound after the market took a dive as jobless claims rose dramatically.  Stocks were sent lower during the morning session as volume swelled.  Much of the selling action was done in panic fashion.  Fear indicators also jumped as sellers dominated trading for much of the day.  Buyers were able to regain control at the end of the trading session pushing stocks just off their highs of the day at the close.

These types of trading sessions happen where panic selling occurs in the early morning part of the trading session.  Only to see buyers step up and push stocks near their highs of the day.  This type of action is very bullish and typical in uptrends.  On the contrary, when the market opens strong only to see the day’s gains wilt into nothing is bearish.  This action is a simple concept to grasp, but very hard to sit through if you are watching intraday.

Often times we’ll see panic selling shake out the weak holders of stock.  It is normal for us to go through as weak holders hold back big movements in stocks.  Essentially, weak holders often keep the supply of stock plentiful not allowing the stock to appreciate.  Simple supply and demand comes into play here.

Top stocks outperformed the broader market showing this uptrend currently in place may have room to run.  We’ll need to see these stocks continue to shine, but we’ll also need the rest of the market to cooperate.  Volume needs to continue to favor the upside and continue to build the accumulation necessary for a sustained uptrend.  The healthier the market is the better chance we have at seeing monster stocks run.

The uptrend remains intact with only one major day of distribution.  Outside of Tuesday, we continue to see positive action.  Remember, always cut your losses and let your winners run.