Market In Confirmed Rally Mode: Investors Business Daily
- Thread starter HedgefundTrader2
- Start date
As I see it, it has very little to do with changing their minds, but rather to following the system they have in place. A week or two ago they had a follow through day (one I chose to ignore), but my opinion doesnt have too much to do with the black and white issue of "did a fallow through day occur". It did, plenty of follow through days are generated and then the markets peter out and move lower, thats part of the game. I'm more inclined to have some trust in the one that occured Thursday, although even with that one I have yet to put my own or my clients money into equities yet. I will be watching the first pullback closely though, and should it occur on lower volume and manage to not take out prior lows I'll be a buyer of strong stocks. There are a number out there, a few examples include HCBK, IBM, MA and many more. With that note having been made we still do not have a lot of clear leadership yet, either in terms of sectors or individual stocks. This will make it much harder for the most recent follow through day to have follow through..but at this point everyone is ready to throw in the towl, and where as 3 months ago if you were a bear you got ridiculed, today the same happens if you are bullisih.
Too funny, that's exactly what i'm thinking about you!
Some things never change!
landis, I would think at this point in your life, you'd give this BS a rest.
Here is more from S&P Market scope that I read today, and it talks about why this one seems like a genuine follow through day. The main reason behind it is the massive Fed Rate cut of 3/4 points. These Rate Cuts are huge waves rippling through financial markets and banking systems. This will lower checking and CD accounts and Treasuries and there won't be a place left to park your cash without suffering some form of indignity. Its the same cash taken out of stocks and real estate markets and thats where it will end up going back.
"For the week, the DJIA gained 3.43%. The S&P 500 gained 3.21% while the NASDAQ rose 2.06%. Stocks finished the week with bullish momentum. Todayâs new buying showed improved investor confidence in the equity market. There are a few technical conditions favoring more short term gains in stocks. On the momentum front, momentum is bullish while none of the major indexes is overbought. There is some room above before all three major indexes run into their resistance at their respective February highs. On the sentiment front, sentiment remains extremely negative which is bullish for stocks. The Investors Intelligence bullish advisor reading dropped to 30.9%, the lowest level since late 2002. With short interest ratios high on the exchanges and plenty of cash on the sidelines, we could see money get put to work in stocks as we head into the spring"
According to William O Neil in his book " 24 Essential Lesson for Investment success" Lesson#14 page 81 he writes " About 20% of the time these follow through days will give false signals and the market fails on large volume".
IF you do not have the book or read it, its highly recommended you buy it and read before throwing your dice with people who have read and mastered it.
One recent study put the success rate at around 54%, a little more than half.
http://quantifiableedges.blogspot.com/2008/01/ibd-follow-through-days-pt-1-are-they.html
Why dont you call IBD and ask them how they define 80% success rate in those follow through days? Can't say what this study did or did not do, always hear from the horse's mouth.
1//To me its pretty obvious and to others who are Technically oriented that SPX failed to take out Jan 22 nd 23 lows in 6 successive attempts in 6 weeks. That makes that 1270 area as solid support and its significance cannot be ignored based on two spiked columns its resting on. Looks like floating rig in a sea of crazy ocean waves.
2//If SPX cannot breach support its most likely option is to go up o sideways. If it does go up and tests 1400 level and succeeds its a clear cut bull market .
3//If it doesn't go up and moves sideways those 28 , 50, 200 moving average's will start flattening out and a break to the upside would be a logical next step after a period of consolidation.
Remember bad news and massive rate cuts are now in the past. Cash is earning 1.5 -2.5 % and needs to be invested in logical assets classes like equities and real estate. Times are changing fast...
yes, like 2% is any worse than 5% that it was earning before with the dollar collapsing. Money flow will probably go to destressed debt and back to commodities if at all, or will just stay on the sidelines for now. Look what happened to the legendry Bill Miller, now he looks like the fool of the decade
