Jerry Samet
10-12-2011, 09:57 PM
The market had a strong rally going and a solid FTD appeared likely. Then there was a sell off near the close that erased much of those gains. Volume was higher across the board. The NYA finished up 1.43% and that was enough for IBD to call an FTD on that index. I am skeptical of this call as I like to look at follow through action and have no doubt that it was an FTD. This one appears marginal at best. Mike's recent research shows that in recent bear markets the first leg down was followed by a rally up to the 200dma, so if this bear follows that pattern we could have some further limited upside. The %E's are 17.4% so they are in the proper range, we had a Eureka on Monday and the weekly Coppock is on the verge of giving a signal. An FTD confirmed by all three of these indicators has a high probably of resulting in a tradable rally. Leading stocks did not participate as the leaders index declined .87% on higher volume. This would be distribution on a major average. Leadership is still very thin and I would treat today's action with caution. Jerry