What Next?
Yesterday
posted a nice rally containing everything a one-day rally could have.
The market was up over a percent on volume that was bigger than the previous
day. Unfortunately, one day does not make a rally, or a bull market for that
matter.
What next? Look for one of the major
indices (Dow Jones, S&P 500 or Nasdaq) to post a gain of 2% or more on
increased volume over the prior day between next Monday and Thursday. This
“follow-through” on the rally that began yesterday, must occur before
yesterday’s lows are undercut. If the low is taken out, then the “rally”
is over and we have to start the whole process over again.
The next step to take, as
intermediate-term investors, will be to go through stock lists this weekend in
anticipation of the rally being confirmed. This allows us to be prepared with a
laundry list of stocks to buy if the market does indeed decide to move ahead. It
will also tell us something else: what the chances of the market’s rally
succeeding are. The more strong candidates we are able to find this weekend, the
better. If only a few stocks look good, then the newest rally may be
short-lived.
Have a great and productive weekend!