Tuesday, July 27, 2010

Stock Market Investing Today Recap

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Here's my near daily stock market investing today recap. In case you missed an earlier article I wrote called IBD market direction checklist, one of the first things I do is check the market indexes to see how it affected the overall market trend. Today's action provided a couple of learning points about distribution days.

The first lesson is that just because the market closes lower on higher volume doesn't necessarily mean it's a distribution day. On the S&P 500, the index closed .10 percent lower. Distribution days are only counted if the decrease is .2% or more. So the S&P escaped a distribution day. I learned this a while back when a similar day occurred on an index.

The other lesson to be learned today is that distribution days don't stay in the daily count forever. They can be erased on either time or distance. The NASDAQ and the NYSE erased a distribution day because the gains had risen high enough to make wipe them out.

I'll have to research the requirements to see what the qualifications are to erase distribution days. This is a good example why it pays to take the time to decide what you think the indexes did and then compare it to what the IBD says. In this particular case, I wouldn't have caught that. Whenever that happens, you need to update your daily routine to account for your mistakes. Since I just go by what the IBD says and don't keep track it's kind of immaterial but it also is a good reason to subscribe to the paper.

Otherwise the indexes were mixed today but overall the condition of the market improved because of the ability of two of the market indexes to shed a distribution day.

The NASDAQ seems to be the strongest of the indexes despite the lower close on that index.

Overall the market in confirmed uptrend continues and so you still want to look over your stock market investing screens for a great stock to buy.

Good luck!

Ty

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