Nasdaq 90% Upside Volume: Bullish or Bearish?

In yesterday's Nasdaq rally, over 90% of the volume in the index was in stocks that traded higher.  Some consider this a bullish indicator for future gains.  In the table below, we looked at all the days since 1990 where over 90% of the volume in the Nasdaq was in up stocks.  As the table below details, while the one week and one month average returns going forward are positive, the results vary widely between each occurrence.

We also wondered whether or not how oversold the Nasdaq was going into the 90% upside volume day had any impact on the subsequent returns.  In the chart below, we compared the Nasdaq's 50-day moving average spread before the 90% day and its one month return following the occurrence.  Interestingly, there has been only one occurrence where we had a 90% day when the Nasdaq was above its 50-day. As you can see, the more oversold the Nasdaq was going into the 90% day, the greater the potential returns going forward.  Going into yesterday, the Nasdaq was 1.5% below its 50-day moving average.