Just another day in paradise as the stock market continues to power ahead. Lead by Small Cap stocks the market finished higher for the second straight day. After Thursday’s follow-through day we have been on top of this rally, despite any opinions and today was another example of how important it is to leave your opinions in check. Volume jumped double digits across the board as institutions picked up their pace of buying as more leading stocks broke out. We may be on the side of overbought conditions, but it appears this market has more left in the tank.
A few indicators are flashing short-term overbought conditions, so we could see a few days worth of a pullback or consolidation. But, if we avoid any failure signs such as HEAVY distribution and failed breakouts this market will continue to produce gains. It may not be the gains we may hope for (dangerous emotion in stock market trading), but we’ll take whatever this market will give us. Stay on top of the leading stocks and leave the laggards behind.
Friday’s job report will be an important one for talking heads. Not to mention political debates. Again, the government, despite what party is in office massages the numbers. How? Easy, use birth/death rates to skew the real numbers. Another easy trick is to NOT count those who give up on looking for a job. While a few out there include those who have a part-time job, but need full-time work we really should do away with pure manipulation of employment figures. This paragraph should teach you a lesson, ignore government statistics and simply pay attention to the price and volume action of the market.
You know the warning signs and another one we have is when stocks who have been on a monster runs breakout out of late stage bases. Beware of failure of late stage breakouts! As always keep your losses short.
By definition, the follow through day is not Thurs, Mar 24th, as the rally attempt really ‘technically’ began on Wed, Mar 23rd. IBD defn:– rally starts on the 1st closing up day from the bottom, or alternatively, a red candle which closes near the high of the day. Also Mar 23rd’s bottom undercut the Mar 21st bottom, which was ‘technically’ the first day of an attempted rally before being undercut. So, all in all, ‘technically’ there has not been a ‘follow through’ day as yet. Yes, splitting hairs….but IBD, is what it is.
Your thoughts?…thx.
IBD uses 1.7%, NASDAQ closed up 1.4%…on bigger volume than the prior day. Splitting hairs? I say, IBD is behind in the times.
Remember day one is the first positive close after the low of the rally. The low of the NASDAQ was 3/16 and the first positive close was 3/17.
And, you can see 3/24 was the right call for a follow-through day with all these breakouts occuring. They may be a bit late stage, but they are still breaking out. This means two things, we either get big gains or this signals the market topping.
I thought it was the first closing ‘up’ day, not just a positive day over a down day as the criterion for the first day of a rally attempt??.
Any how, if the criteria you laid out is accurate, then good news….because today would be the 5th trading day after the follow through day, with no distribution days encountered(hopefully not today too). That bolds well going into the intermediate future.
Day one can be the day that is the “low.” Positive close = ‘Up’ day
Today’s action is very constructive right now.