Magnitude of moves

Good Bull markets are characterized by explosive swing moves. In last 3 or 4 days we saw some of that on a narrow set of stock. In many good bull market this kind of action is more widespread.

These kind of explosive moves in a short time period of 3 to 25 days are the momentum bursts. Stocks make such momentum bursts and go sideways, pullback , or reverse. Next set of stocks then breakout. This kind of rotation is characteristic of bull moves.

The number of stocks up 25% in a month and 50% in a month help you gauge the magnitude of moves happening in the market. In last 3 days those figures ticked up in this long running rally.

That can also be an indicator of final blow off stage. Or it can be indicator of more normal market action. These numbers have dramatically picked up in last few days. Last time we saw these kind of numbers was in August 2012. 

This rally has been characterized by low magnitude moves. But in last few days that is changing.

Stocks move in momentum bursts of 3 to 5 days. These momentum bursts last only for short duration but can be of 8 to 40% magnitude. Smaller stocks tend to make bigger moves. Bulk of the swing trading methods have eveloved to capture these kind of momentum bursts moves.