Market Alert: Record Volume Last Week Could Be a Good Sign

Rick Pendergraft of Investor's Daily Edge, advises investors last week's trading volume could be a sign of things to come.

(PRWEB) March 8, 2007 -- Volume maybe one of the easiest indicators to read, but that should not diminish its importance.

"Most people would consider volume to be a technical indicator, but I would say it is a combination of a technical indicator and a sentiment indicator," states Rick Pendergraft, Chief Investment Analyst at Investor's Daily Edge (www.investorsdailyedge.com) and Editor-in-Chief of The ETF Options Trader.

Last week's huge sell-off came with huge volume, as the New York Stock Exchange and the Nasdaq hit record highs for volume. The three exchange-traded funds that track the Dow, the S&P 500 and the Nasdaq 100 all had record volume days last Tuesday. The Diamonds traded more than 30 million shares, the Spyders traded more than 250 million shares, and QQQQ logged 315 million shares. The cubes and Spyders easily hit all-time highs for weekly volume.

Rick adds, "In volume analysis, volume spikes such as these normally mark turning points in the market."

This could cause a dilemma, and that is, that these volume spikes are coming at the end of an impressive bull run in equities. Traditional analysis says that volume spikes at the end of a trend should mark turning points. But that is when investors typically see volume spikes that occur -- when the price action coincides with the trend. In this case, the volume spikes are on down days at the top of an uptrend.

"Given the amount of selling we saw last week, my gut feeling is that this sell-off forced a lot of weak-handed bulls out of the market and that we have a buying opportunity at hand," Rick advises investors. He continues, "However, gut instinct isn't always the best thing to trade on, so I will wait for a confirmation that this was a correction and not the beginning of a downtrend."

For more information and to read the full article, visit Investor's Daily Edge at http://www.investorsdailyedge.com/archive/index.php

About Rick Pendergraft
After a ten year career in banking, Rick Pendergraft pursued trading full-time. Prior to joining Investor's Daily Edge, Rick worked at Schaeffer's Investment Research under Bernie Schaeffer, one of the top options traders in the world. Rick received the "Top Trader" award.
Widely recognized as a market expert, Rick has been frequently quoted by Reuters, BusinessWeek, Forbes, USA Today, the New York Times, and the Washington Post. Rick's primary focus is on identifying short and intermediate term rising and falling trends in the major market sectors. His analysis is based on technical factors along with indicators of market sentiment. Rick is currently the Editor-in-Chief of The ETF Options Trader.

Investor's Daily Edge (www.investorsdailyedge.com) is a free investment newsletter that's delivered by email before the market opens. In each weekday issue you'll receive clear recommendations and practical strategies for protecting your portfolio and multiplying your money - whether the market is rising or falling.

For more information about our editors, or to set up an interview, please contact Wendy Montes de Oca at 561-921-0001 or visit www.investorsdailyedge.com.

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