According to Martin Zweig, author of "Winning on Wall Street," when the vast majority of NYSE stocks are trading up, it's a sign that the market is in the midst of a healty rally. This atomic bomb of insight is brought to you by the genius of technical analysis.
Zweig pounces on the subtle indicator that is a 9-to-1 day - or when the volume of rising stocks is 9 times the volume of declining stocks. Last Friday was the third 9-to-1 up day for NYSE listed stocks in the last two weeks of August, creating a "triple 9-to-1 signal" that is impossible to ignore if you're interested in "Winning."
Forget the fact that there have been several down 9-to-1 days since the market correction began in mid-July. There is still reason to delude oneself into thinking the market is happy and magical. From MarketWatch:
To be sure, the volume story is not uniformly this bullish. For example, there have been several 9-to-1 down days since the market correction began on July 19. According to Zweig, a 9-to-1 down day in the proximity of two 9-to-1 up days implies "not as much (upward) thrust" as do two 9-to-1 up days that are unaccompanied by a 9-to-1 down day. Nevertheless, Zweig wrote that the stock market's average return is still above-average following double 9-to-1 days that are accompanied by 9-to-1 down days. "The record (for such days still) provides great comfort to the bulls," as he put it in his book.
In other words, and it takes an expert to point this out, when there are a bunch of 9-to-1 down days, a "rally" in which stocks aren't rallying at all over a larger time frame or when there are several days in which the vast majority of stocks are declining, is not as strong as a rally in which stocks are doing nothing but going up in large numbers over an extended period of time.
Bullishness by the numbers [MarketWatch]