Big stock market rally comes with no signs of panic buying behavior

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Despite the big rally in the stock market amid upbeat news on a potential COVID-19 vaccine, a dig into breadth data suggests there are no signs of panic buying behavior. That could potentially be a good sign for the market, as panic buying could represent capitulation, which is often a contrarian indicator. The Arms Index, which is a volume-weighted breadth measure that tends to fall below 1.000 when stocks rise, is at 1.094 for the NYSE and at 1.171 for the Nasdaq. Many Wall Street technicians believe the Arms have to fall to 0.500 or lower to indicate panic buying behavior. The number of stocks advancing is outnumbering decliners by a 9.2-to-1 margin on the Big Board and by a 4.6% margin on the Nasdaq, while the volume of advancing stocks is outnumbering declining stocks 8.4 to 1 on the NYSE and 3.9 to 1 on the Nasdaq. Meanwhile, the Dow Jones Industrial Average is up 1,238 points, or 4.4%, the S&P 500 is rallying 3.2% and the Nasdaq Composite is gaining 0.9%.
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