Stocks rose for the third consecutive day on Tuesday. And the Nasdaq led the
other indices with the highest percentage gain as it did in each of the previous
advances. Volume on the NYSE picked up, but is still just a fraction of the
downside volume that drove stocks into last summers trading ranges. The NYSE
traded just over 1 billion shares and the Nasdaq traded 541 million. Advancers
were ahead of decliners by 1.9-to-1 on the Big Board, but on the Nasdaq,
advancers barely beat out decliners. By closing above Mondays high, the major
indices confirmed a breakout from the consolidation triangle that has dominated
trading for almost all of August. Yesterdays break was impressive despite the
relatively low volume. Stocks fought off an early round of selling that resulted
from a disappointing August Consumer Confidence Index number and the minutes
from the FOMC meeting that indicated that members were in disagreement on what
to do about a lagging economy. And so bad news was ignored and stocks forged
ahead a very positive development for the bulls. This is especially significant
when stocks move out of a potentially bearish formation like the August
consolidation. The Nasdaq looked especially strong yesterday, as it rose despite
some last-minute selling, and confirmed Mondays gap and break through its 20-day
moving average (green line). Also note that its stochastic indicator still has
some room before becoming overbought. Despite
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