Posted on September 17, 2008 - by andrew

Market Recap - September 16th, 2008

The markets made a positive reversal and ended up with big gains on heavy volume:

• NYSE: 1.5%
• S&P 500: +1.8%
• Dow: +1.3%
• Nasdaq: +1.3%

Yesterday’s action was encouraging. Stocks were down most of the day until late afternoon when volume kicked in. Several leading stocks on my watch list made gains on above-average volume:

• Concur Technologies  (CNQR)
• McDonalds (MCD)
• IBM (IBM)

Keep an eye on these stocks. I especially like CNQR because:

1. it had a big run-up prior to its base
2. its base doesn’t have any distribution weeks on above average volume.

Conclusion: We are not out of the woods yet. I am treating this as just another day. We need to see a confirmation day before I believe that a new rally has begun.

Yesterday counts as Day 1 of a rally attempt. According to Investors Business Daily and How To Make Money In Stocks, a confirmation day will happen:

1. On or after Day 4 of a rally attempt
2. When at least 1 of the major indexes gains +2% on higher volume.

Until then, stay in cash, keep your watch lists updated and wait for the rally to start before buying stocks again.