Monday, June 01, 2009

Five Characteristics of an Upward Trending Market

Here are a few things we look for to identify a potential trend day to the upside:

1) NYSE TICK stays mostly above the zero neutral value;

2) We show significantly more volume executing at the market offer than bid (above Market Delta chart, bottom histogram);

3) Advancing stocks significantly exceed declining issues;

4) We build volume/value at successively higher prices, as higher prices facilitate trade (right side histogram above);

5) Great majority of sectors and stocks up from open; index consistently above VWAP (red line above).

Knowing these features can help traders buy weakness and avoid fading the directional move.