Volume can be an important tool for technical analysts but it can also be difficult to interpret volume signals. This week, MarketWatch columnist Mark Hulbert noted a relatively rare volume indicator flashed a buy signal on Friday. Unfortunately for the bulls, Hulbert’s analysis was incomplete and the indicator didn’t signal a "buy."

Hulbert was referring to a signal popularized by the late Martin Zweig called a “nine-to-one up day.” Zweig was successful because he dug deeply into the markets and used nine-to-one days in a disciplined manner. Zweig understood not all nine-to-one days were important. Under his method, Friday’s signal was not a meaningful buy indicator.

The nine-to-one day signal, which Zweig attributed to Lowry’s Reports in his book, is useful to spot the end of a bear market. With stocks down about 15 percent from their highs, we aren’t in a bear market. Zweig also noted that this indicator works best when the Federal Reserve is lowering interest rates rather than raising rates as they are now.

Zweig’s book detailed a complete trading strategy that relied on the “weight of the evidence” provided by a number of indicators. He didn’t rely on a single indicator and using the rules he laid out, the market is actually bearish.

Zweig was a very successful investor as demonstrated by his track record and more tangibly by the 5-bedroom apartment overlooking Central Park that he lived in for many years.

Zweig’s apartment is now for listed for sale at $70 million, a measure of proof that indicators when followed correctly can lead to success.

Michael Carr, CMT, is a subadviser to a mutual fund family and a chartered market technician. To read more Michael Carr, CLICK HERE NOW.