Stock Market Analysis - CSCO and Nasdaq Push Market Higher

Cisco Systems (CSCO) helped send stocks soaring yesterday. It was the Nasdaq that lead the market, gapping up at the open and continuing to rise during the day. The Nasdaq index rose 2%. The NYSE composite jumped 1.5%, the S&P 500 1.4% and the Dow industrials 1.1%. The small-cap S&P 600 bounced 1.5%.

Volume swelled across the board. The Nasdaq's total of 3.68 billion shares marked its second-biggest reading of the year, trailing only the most recent quadruple-witching day June 22. Cisco added about 110 million shares to the Nasdaq's tally, vaulting 7% on nearly four times average trade. Cisco's breakaway gap left the stock at its highest point in 6 1/2 years.

The market's big gains were an encouraging sign that this latest correction is concluding. Highly rated stocks have fared well. A number of former market leaders have staged robust gains in rapid turnover, returning to prominence. That kind of broadening leadership is typically a good sign for an emerging rally.

Of course, today the market is down but as I have counseled before it is important to pay attention to volume. Down days on lighter volume are a sign that the market is digesting recent gains. We can't go up every day. What you want to see is the bigger picture and look for signs of institutional activity.

Christopher Smith
TheOptionClub.com