Follow Through Buy Signal

 Yesterday was a technical follow through day in the IBD system, and this time they did call it (we have had 3 others since may that they, wisely as it turns out, did not call), so we are back in rally mode, and sure enough, today the Elder impulse chart confirm it with a buy signal. in fact, we are getting a buy signal on MACD as well. So, despite the fact there isn't a whole lot to buy, I am going to be looking for those stocks that will lead this rally. How long does it last? My best guess is we take another shot at 1250, but there is no guarantee we stop there (or get there, for that matter). Follow through days signal rallies, but they do not tell us how high they go or how long they last. At le least, we should have a pretty clean shot at 1208.

 We are, at least do far, getting non confirmation on the Nasdaq, which once again is showing some weakness. Another up day will give us a green bar here, a day late and a dollar short.

 The Russell 2000 is also not on a buy signal yet, but at least is not lagging as badly as the Nasdaq, If this has a big day or two in the immediate futere I will be a lot less skeptical of this rally than I am now.

Ticker	Relative Strength Index (14)
XLU	58.4
XLP	52.8
XLV	49.02
XLY	46.55
XLK	45.09
XLE	43.18
XLI	43.09
XLB	42.62
XLF	42.3

Here are the current ranking of sector ETFs by RSI. No surprises here.

Many of the utility stocks look very much like the XLU chart: a big drop on the market's first leg down, but no drop when the market went down a second time. This now has a what looks like pretty strong support at 32. It will probably not be the leading sector is the market is going into a rally, but it sure has a big head start.

XLF is really looking about as bad as you can get here, and it's not all BAC, which had a 10% up move today (which, incredibly, failed to get it as high as it was two days ago) that was fueled by a rumor of a JPM buyout and massive short covering. It is obvious the problems that were uncovered here in 2007 were never addressed, and papering them over only works for so long. So what will Bernanke do? Paper them over again, of course.

The market is apparently attempting to set itself up for Bernanke's speech at Jackson Hole on Friday. I don't know what it is the market is expecting, but it may just be setting itself up for a big disappointment.

I will have the new highs update shortly.