IBD declared this a follow through day, resulting in an “confirmed uptrend”.
The stock market rallied Tuesday after China and the U.S. stepped away from the brink of a trade war, causing a bullish shift in the market’s outlook.
The Nasdaq surged 2.1% and the S&P 500 1.7%. Volume rose from Monday’s levels. Big gains in higher volume marked a follow-through day for stocks, a confirmation of a rally attempt that began a week ago. The small-cap Russell 2000 jumped 1.9%.
A follow-through is a bottoming signal, which means IBD’s market outlook has changed to confirmed uptrend. It ends a market correction that IBD signaled on March 27, although the indexes peaked March 13. Investors should regard Tuesday’s signal as a time to start getting back into stocks, specifically fundamentally sound companies that are in proper buy areas.
Even with a bullish signal at their back, investors need to be cautious as they increase exposure. While the indexes more than satisfied the technical requirements for a follow-through, the market remains volatile and sensitive to headlines.
This is the most worrisome rally in a while, which means it might be the best while climbing that wall of worry.