There are a multitude of different ways to get a basic or in depth read of what the market overall has been up to. When speaking of the market as a whole you usually refer to one the major market indices such as the S&P 500 or the NASDAQ Composite. This post will utilize the S&P 500 and apply a basic tactic of utilizing a stock chart and volume.
Look at a Chart, Use Simple Volume Interpretation
Applying the lessons covered in understanding volume, we can take a quick look at chart of the S&P 500 and pull some simple conclusions as to where the market is as whole.
This stock chart may look complex, but lets look at this from a simple perspective and observe some trends the market has had here in 2007:
- From mid March all the way until June the market was in a strong uptrend
- From June until mid July the market was flat
- From mid July until now the market has been in a steeper downtrend
If we look at the most recent movement of say the last three days, we can see that volume has been well below average. As a result, do you think the move taking the S&P 500 back above 1460 is credible, or will the downtrend continue? Furthermore, what seems like a better time to buy, during an uptrend like the one earlier this year or during the downtrend we are currently in now?
Setting up a stock chart to perform this simple technical analysis is actually quite easy. There are a few places to gain access to free stock charts: stockcharts.com, yahoo finance, google finance, and bigcharts.com are just a few. All it takes is a few seconds to open up one these websites, click to view a chart of the S&P 500, get to a year view, and compare the volume to recent price movement. Done deal.