Mid-week market update: I wrote on the weekend that investors should watch for signs of an O'Neill follow through day for bullish confirmation of the rebound.
A follow through day can occur as soon as day 4 (last Friday) of a rally. It’s defined as the index rising 1% or more on higher volume than the previous day. The most powerful follow through days occur between day 4 and day 7 of the rebound.
We got the follow through day on day 6 yesterday when the S&P 500 rose 1.6% on higher volume. This is an indication that the bulls are seizing control of the tape. Even as the S&P 500 tests overhead resistance at the 50 dma, the follow through day raises the odds that the market will break up.
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