When The Stock Market Has A Strong Up Day

Today was a strong up day in the stock market with the S&P 500 advancing 2.27%, the Nasdaq up 2.80% and the Dow up 2.08%. It was indeed a great day to be invested in index funds and stocks that are outperforming the broader market.

When the stock market has a strong up day like today you can learn a lot about which sectors and individual stocks are relatively strong, because they will generally outpace the broader market. This is due to institutional investors buying a lot of shares to either open or add to existing positions, bidding the share prices up in the process.

Three out of four stocks follow the direction of the broader market, whether up or down.

If you invest in individual stocks, on a strong up day like today take a look at how your basket of individual stocks have performed compared to the market's advance. Did any outpace the broader market advance? You may want to add to these positions. Are there stocks that are clearly lagging, or did some even close down in price on a day like today? These may be candidates you want to trim from your portfolio in exchange for stronger performers.

A great free online resource to help with such decisions is Investor's Business Daily, which lists stocks each day that have moved Up and Down in price with greater than average volume. This type of price/volume action represents institutional money that you don't want to be betting against.

When the stock market has a strong up day it's a great time to identify leaders and laggards!