If you are an everyday reader of IBD, then you got the word faster than I did, because I checked with the website today and, sure enough, we have a follow through day. Yesterday's NYSE volume, after being revised about 2 hours after the close (hey guys, see if Goldman can lend you one of their computers) and yesterday did indeed qualify. i was a bit confused, because a follow through day comes on day four or later of a rally attempt, and by my count yesterday was day 3. Apparently the day that the low is made counts as day 1. This stuff isn't rocket science, but for some reason I have trouble keeping it straight. Anyway, we are now again in "confirmed rally" mode for the 3rd time since this correction started, and I will play it by the book, again sending out a few scouts (the last few came back with so many arrows in their rear ends I'll have trouble getting volunteers). We have the crossing of the exponential averages (the simple averages crossed a couple of days ago) and that crossing is the first obvious target, and I expect tremendous resistance there.
The Nasdaq has that great big gap serving as a target, but whether the bottom or top of the gap will be the resistance point is unknown, although I strongly suspect the top. The price relative line has a short term down trend, but since this correction began it has been tranding sideways, which has probably been a factor in keeping the carnage more contained than it could have been.
The Dow industrials once again leading the way up, a not so good sign in my book, as it normally underperforms a bit in strong markets. This is now a day or so away from challenging the "death cross" area, and I would not be the least surprise to se it break through only to reverse back, setting a bull trap.
Gold (via the ETF GLD) is doing a "stealth" consolidation jusr underneath the 50dma, waiting for the next crisis to erupt, whcih should be any day now, there are so many to choose from. Technically there isn't much you can say about it bearish wise, until it breaks the previous low.
I don't know what kind of odds there are that we will have 3 failed follow through days in a row (then again, how do you define "failure"? The last successful follow through day resulted in a rally that lasted only a month and a half). Probably not very high, but then again, as a disciple of Yoda O'Neil, I know it doesn't matter. On thing I love about the O'Neil system is it always works best when you don't let your opinion get in the way.
I will have the new highs update shortly.