Why Are Tuesdays Stock Market Volume Patterns So Important?

dow jones industrial average price analysis monday trading session higher chart image september 13

The major stock market indices closed surprisingly well on Monday.

Although the initial morning gap-up did not hold, the Dow Jones Industrial Average (DIA) and the Russell 2000 (IWM) were able to make a comeback with support from IWM’s 50-DMA at $221.58 and the low of 8/19 at $347.31 for DIA.

On the other hand, the S&P 500 (SPY) and the Nasdaq 100 (QQQ) have not run into main support from their major moving averages and are most likely holding due strength found in the DIA and IWM. 

This means that if the SPY and the QQQ are going continue higher without making a full pullback to support they will need both the DIA and IWM to lead them. 

The reason why DIA and IWM are qualified to lead the market higher is that both held key support levels while the SPY and QQQ did not. 

However, if the QQQ and the SPY do not hold over Monday’s low, watch for them to head towards their 50-Day moving averages at $441 for the SPY and $368 for the QQQ.

With that said, if Monday’s dip buyers were correct, Tuesday should bring continued strength.

One way we can tell if buying is strong is by watching intra-day volume compared to the average amount.

To do this try watching volume on a 5-minute chart compared to past trading days.

What we are looking for is higher volume as the market moves up. 

If tomorrow’s price action holds or rises on weak volume stay cautious as the indices could be weakening and looking for another downturn. 

Stock Market ETFs Trading Analysis & Summary:

S&P 500 (SPY) 441 is price support.

Russell 2000 (IWM) Closed over the 50-day moving average at 221.58.

Dow Jones Industrials (DIA) Back over price support of 347.31.

Nasdaq 100 (QQQ) 374.22 low needs to hold. 

KRE (Regional Banks) Would like this to stay over the 50-day moving average and clear the 10-day moving average at 64.85.

SMH (Semiconductors) Doji day. Also holding over the 10-day moving average at 271.72.

IYT (Transportation) Flirting with the 200-day moving average. 

IBB (Biotechnology) 168.15 support from the 50-day moving average.

XRT (Retail) 91.49 is price support.

Twitter: @marketminute

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.

Sign up for our FREE newsletter
and receive our best trading ideas and research