How to Spot an IBD Follow-Through Day

For you IBD followers... For future reference, you might want to set this as a Favorite on your browser..

http://www.investors...mp;issue=201003

Good luck with the trades.

"From the beginning of any attempted rally during a definite downtrend, a follow-through day is identified when at least one of the major indexes (the Dow, S&P 500, NYSE Composite or Nasdaq) closes up generally 1.7% or more for the day on a significant increase in volume from the day before. There have been a few exceptions where in some markets it’s more, some it is less; you might see a 1.6% or 1.5% at certain junctures."

She talks as though they use objective rules, but when you read the rule above, it seems rather subjective to me. It sounds as though she is saying that in some markets more than 1.7% is needed as a trigger, while in others as little as 1.5% will sufice. I don't see an explanation of how you know what minimum is needed in any given market.

Nothin' wrong with that. They are entitled to make the calls as they see 'em, and they've been dang good to say the least! But as I read it, the rules are NOT cast in cement, unless I'm missing something here. So I don't try to make the call myself - I just let them do it. D

"From the beginning of any attempted rally during a definite downtrend, a follow-through day is identified when at least one of the major indexes (the Dow, S&P 500, NYSE Composite or Nasdaq) closes up generally 1.7% or more for the day on a significant increase in volume from the day before. There have been a few exceptions where in some markets it’s more, some it is less; you might see a 1.6% or 1.5% at certain junctures."

She talks as though they use objective rules, but when you read the rule above, it seems rather subjective to me. It sounds as though she is saying that in some markets more than 1.7% is needed as a trigger, while in others as little as 1.5% will sufice. I don't see an explanation of how you know what minimum is needed in any given market.

Nothin' wrong with that. They are entitled to make the calls as they see 'em, and they've been dang good to say the least! But as I read it, the rules are NOT cast in cement, unless I'm missing something here. So I don't try to make the call myself - I just let them do it. D

Borland, thanks for posting this.

IYB, no kidding on the subjectivity. I think the IBD follow-through day as an indicator of market tone is viable but the precision is as fuzzy as the back of a porcupine. How much up does it take for the signal?, How much volume is there until the market on close? How many distribution days does it take to turn the rally off? In what indexes?

And sometimes the market just plays hurricane havoc with their timing. For instance, right now. I have an aggressive trading buy signal in place from Feb 9th on the NYMO low-above-low, and a longer term buy single from Feb 12th on the upturn in the NYSI. Your seven sentinels gave a buy on the 16th.

And now they jump in March 1?

Talk about lag. I think there were days in early February when they should have called it (Feb 11 would have made them look good). Oh, well, to each his own...

Don't read IBD anymore but must admit I did have a love affair with it for more than 20 years.

Best to you both.