What Would Signal A Stock Market Rally?
For a return to a confirmed market uptrend, look for the major averages to rebound over several days, with at least some strong gains in heavy volume. As Tuesday's rebound showed, one good day isn't enough.
If stocks rebound quickly in volume, then the major averages hitting new highs would likely trigger a market uptrend call.
If the stock market holds in a correction for an extended period, look for a rally attempt to be confirmed by one or more price gains in heavy volume in at least one of the major averages.
The Dow industrials get a lot of popular attention, but the index represents only 30 stocks. The broader Nasdaq composite and S&P 500 index are usually the gauges you should focus on.
Another confirming sign of a market uptrend will be if leading stocks break out of bases into buy zones. If there's nothing to buy, the market may be telling you it's too soon to return.
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