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Our research draws its market bias from a combo of Fundamental and Technical evidence. Economic and earning trends are matched against our analysis of price and volume charts, giving us an indication of how friendly or unfriendly the market is behaving. The goal is to identify top growth stocks... More
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  • A Follow Through Day 2 comments
    Jun 15, 2010 8:17 PM | about stocks: IYT, SMH, XLF, XRT, OIH, IGN, DECK, MELI, CMG, AKAM

    Well hot dog, we got our Follow Through Day.


    Sharp rallies accompanied by heavy buy-volume across the major indexes tells us institutions are showing some interest in the long side of this market.

    Some of our friends in the media suggest it's all due to less fear over European concerns, but to us it's just good old fashioned buying.

    This type of follow through off market lows has been evident in every major bull move the market move. But not all follow through has led to sustained rallies.

    As the major averages poke above their 40-week moving averages we want to see them gain traction. It's important quality leadership step up here.

    While the not so bullish indication of Oil Services leadership led Tuesday's action with a 5% rally, it's more encouraging that we got some traditional leaders of sustainable rallies from Semiconductors (NYSEARCA:SMH), up 4.5%, Technology (NYSEARCA:IGN), up nearly 3% and Transportation (NYSEARCA:IYT), also up nearly 3%.

    Further confirmation in coming sessions from other key sectors, like Retail (NYSEARCA:XRT), up more than 1%, and Finance (NYSEARCA:XLF), up more than 2%, would be positive signs for the broader market. We want to measure this action weekly as one day weighs little in the bigger picture.

    And as Growth Stock buyers, we want to see recent breakouts stick from top stocks such as Mercadolibre (NASDAQ:MELI), Chipotle Mexican Grill (NYSE:CMG), Akamai Technologies (NASDAQ:AKAM) and Deckers Outdoor Corp. (DECK.) We have a number of other top stocks poised to follow these leaders. Much of their success will be tied to the number of their peers that can continue to chug higher.



    Disclosure: Long: MELI, LULU, HITK Short: TEX

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Comments (2)
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  • willydo
    , contributor
    Comments (241) | Send Message
    Thanks for the follow-up article to your previous comments (waiting for follow-through volume). So we need to see a few more of these obviously.
    On another site (Dave's Daily), the volume was described as very light, so that doesn't sound like a follow-through day or 'accumulation day'. I wonder if we talking different indexes here or just interpretation?
    'Stock indices were sharply higher taking out 200-day moving
    averages again but volume was abysmally light...again. (HAL
    9000s run wild, I guess.) Breadth was overwhelmingly positive'.
    15 Jun 2010, 10:12 PM Reply Like
  • GSRTrades
    , contributor
    Comments (10) | Send Message
    Author’s reply » Per William O'Neil of Investors Business Daily, a Follow Through Day just needs one of the indexes up at least 1.7% on volume greater than the day before. It doesn't account for volume averages. Of course, the more volume the better. But the signal is still good. Dan
    16 Jun 2010, 10:01 AM Reply Like
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