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How Markets May Extend The Rally Next Week

|Includes: AAPL, BlackBerry Ltd. (BB), QQQ, SPY

With the meteoric rise in the markets of late, many are wondering if it can continue. Problems are looming but in the last two months, the markets have ignored them all, having only a handful of minor down days. Can it continue? Here is a possible reason to say yes!

Volume next week should be muted due to three factors. The first is Passover, a Jewish holiday which begins Monday night. Holidays can always cause light trading. In addition to Passover, the second issue that could keep volume light is Good Friday This makes it a four day week and means more traders are likely to take it slow or off completely. The last reason the markets could continue their run is based off the Jobs Report due out Friday. It is possible to see continued upside as Wall Street anticipates a extremely positive report with jobs gains. Add that to the light volume, based off multiple holidays and it could be a recipe for higher markets.

Dow 11,000 is not far away. It is also possible the powers that be, Treasury, Administration, Federal Reserve will want to make headlines in the news, going into a holiday weekend by slamming the DOW through 11,000. A close above 11,000 could very well be in the cards purely based on the manipulation factor.

The light volume is a true catalyst for upside. It enables the markets to float higher and get small buy programs that create big pops. I have discussed in depth how light volume has been one of the major driving forces behind the recent jump in stock prices. If you look at the SPDR S&P 500 ETF (NYSE:SPY), anytime it trades less than 200 million, the markets are flat or higher. Anytime it trades higher than 200 million, the SPY is lower. The volume factors can also be noted on the PowerShares QQQ Trust, Series 1 (NASDAQ:QQQQ). Keep an eye on key stocks like Apple Inc. (NASDAQ:AAPL) and JPMorgan Chase & Co. (NYSE:JPM). Also, watch Research In Motion Limited (NASDAQ:RIMM) as they are set to report earnings Wednesday, March 31st, after the markets close.

Listed above are the reasons that the market could continue the rally next week. There are just as many reasons for the markets to fall. The key overall will be volume. Decent volume, the markets most likely fall. Light holiday volume, the markets should hold up. To get more information, guidance, trades and education, join the Research Center at InTheMoneyStocks.

Gareth Soloway
Chief Market Strategist