Blog Posts Tagged with Indices

How to Get a Read on the Market

As a long time CANSLIM fan, I'm a firm believer in the importance of the 'M' part of that acronym - "Market Direction". According to IBD:

if the overall market is in a downtrend, it will be very hard for even the best stocks to move higher. That's because 3 of 4 stocks move in the same direction as the general market, either up or down.

(The "general market" refers to the major indexes, primarily the Nasdaq Composite, S&P 500 and Dow Jones Industrial Average.)

Simply put: If you buy a stock when the market is in a strong uptrend, you have a 75% chance of being right. But if you buy when the market is in a downtrend, you have a 75% chance of being wrong.

It's critical to me to have a read on what the broad market is doing. I used to use IBD's 'Big Picture' to get my market read but I find that I can reach the same conclusions using my General Market Analysis page. I've written before about how I use the General Market Overview page to get a read on the market as a whole. Last week I pointed out in my notes last week how choppy & trendless the market was looking. I want to go a little deeper into what it's telling me today.

Here's the trend table for the indices from today's General Market Analysis page: