We've suspected for a while now that investors weren't really as bullish as the quick look at the chart would suggest. Mostly, they're indecisive, not really sure what to expect.

It's a difficult, subjective idea to objectify…. if you don't have the right tools. We do have the right tools though, being able to plot the market's daily “up” volume and “down” volume.

We're not interested in that specific data, however. It's too erratic by itself to analyze. To make better use of it we want to determine the trend of the two datasets. We can do so by applying moving averages of each data set.

That's what you see on the bottom portion of the image below. The thicker, brighter green line is a moving average of the daily “up” volume, while the brighter, thicker red line is a moving average of the market's “down” volume. When smoothed out like this, we can get a good feel for how traders really feel about stocks by figuring out what they're actually doing with their money.