Once you start to track the market, you are going to ask yourself, what happened in the stock market today? But, even though you hear the numbers, what does that really tell you? Today, when I looked at the three major indexes, the S& 500, the Dow Jones Industrial Average and the Nasdaq Composite Index, I heard that they all went down in value today.
However, that was only half the picture.
The second part of the equation is NYSE and Nasdaq volume.
When I looked up those figures I also discovered that both exchanges overall volume was up more from the previous day and also up higher than the average daily volume on both exchanges.
This tells me that the market sold off today since all indexes decreased in value and volume on both exchanges increased.
When this happens and volume is significantly higher, this is an indication of institutional selling.
Institutional buying and selling is what drives the market.
It's not the investors like you and me.
Our buying and selling is almost meaningless to the market and really has no impact on the price of a stock.
When institutions buy or sell, it's a huge amount compared to us.
This influx of money drives up prices and when they sell, the price goes down because there is excess supply.
Once you learn to tell whether the market trend is going up or down, based on the price and volume of the major indexes, you'll know when to be in the market and when to stay in cash.
Study the market each day and let it be your guide.