Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Tuesday, October 11, 2011

Stocks End Near Session Highs, Dow Soars 300

Stocks surged in the final minutes of trading to close at session highs Monday, led by banks, amid optimism that France and Germany's pledge would help resolve the euro zone debt crisis and rescue the region's struggling financials.

The Dow Jones Industrial Average logged its best five-day point gain since Dec. 2008, led by BofA [BAC 6.28 0.38 (+6.44%) ] and JPMorgan [JPM 32.30 1.60 (+5.21%) ]. The Dow has rallied over 1,000 points from last Tuesday's intraday low of 10404.49.

The S&P 500 and the Nasdaq also ended sharply higher. Both major indexes are on pace for their best month this year. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded below 34.

All 10 S&P sectors finished firmly in the black, led by banks and energy.

Over the weekend, German Chancellor Angela Merkel and French President Nicolas Sarkozy promised to present a plan before a G20 summit early next month to shore up euro zone banks, settle the Greek debt crisis and help growth in Europe.

“The optimism is amazing to me—I don’t think any market participant is saying things are fixed in Europe, but what they’re hoping is that by the time Europe starts to resurface again in a few months from now, there will be traction in our economy that will be enough of a positive to wipe out the negative there,” Jim Iuorio of TJM Institutional Services told CNBC.

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