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Tuesday, July 29, 2008

Follow Through Day

According to IBD's criteria we got a follow through on all fout indexes they track. It came on day 10 on the SPX, which is a bit late (ideally they should come on days 4 through 9), but, unless IBD crosses me up (like they have before), this should be good enough.

The Nasdaq was up 2% most of the day, so if the other indexes hadn't come through, this would have. It is day 11 on the Nasdaq, and this is the strongest of the major indexes. I have mentioned before that of late, when the Nasdaq composite outperforms the NYSE composite, we are usually in an uptrend.

The Dow Industrials appear to be the weakest of all the major indexes and it's 50dma has the steepest decline. My guess is the Russell 2000 will significantly outperform the megacaps.

How long and how high will we go? Who knows? Watch for days of high volume selling, especially in the immediate aftermath of the follow through. Watch the breakout list for signs of new leadership. Unfortunately, my industry group project was meant for just such a day as today, but I lost the data and put the project on hold to get the earnings spreadsheet up to speed. However, a quick look at the IBD industry group tracker on page B2 shows several medical groups have moved up big in the last month.

On the earnings sheet, I have on stock confirmed reporting tomorrow, HGRD, and on coming off, HEP. So far there are no additions, but I am still working on the Thursday, Friday, and Monday editions of IBD and probably won't be caught up for another couple of days.

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