Dow Follows Through; Issues Remain
March 21, 2008
IBD has called Day 8 of the Dow Jones Industrial average a follow-through day for the market. This ultimately confirms the most recent rally attempt. It takes only one index to follow through to confirm a market rally regardless if any other index takes out its most recent low.
I am not as bullish in the short-term has Joshua however, I do believe we could see a rally. Ultimately, I do believe that this rally will fail at some point in the near future. New Highs are not turning around, New Lows continue to dominate and the number of stocks above their 200dma continues to be lower than stocks over their 20dma and 50dma. Ideally, you want to see more stocks above their 200dma. This would suggest that a long-term uptrend is in place.
Although we are in a confirmed market rally, there still remains the high risk of this rally failing. Cash is King and longs should be kept small.
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“Cash is King and longs should be kept small.”
Amen to that.
“A follow-through is merely the first step in seeing the market re-establish its strength. Next, you want to see multiple up days occur in brisk trade, confirming the follow-through. If conditions are fertile, top-rated stocks should start breaking out of bases.” (IBD)