tag:blogger.com,1999:blog-2676650858658561710.post3977778447951510210..comments2023-11-02T06:14:07.871-04:00Comments on Quantifiable Edges: Follow Through Days Before The 4th DayRob Hannahttp://www.blogger.com/profile/07596674657839065754noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-2676650858658561710.post-33413870561277780332010-07-20T00:51:43.238-04:002010-07-20T00:51:43.238-04:00Consult William J. O'Neil, How To Make Money i...Consult William J. O'Neil, How To Make Money in Stocks, 4th edition (2009), pp. 219-222. It shows examples of first days of attempted rallies (aka market bottoms) which had an intraday reversal but closed lower than the preceding day. Ridiculous? The SP-500 rallied almost 9% from the 7/1/2010 intraday low before it began stalling on 7/14.veenmr1https://www.blogger.com/profile/16256689944541429661noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-24000084621592299022010-07-18T20:24:54.456-04:002010-07-18T20:24:54.456-04:00This comment has been removed by a blog administrator.veenmr1https://www.blogger.com/profile/16256689944541429661noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-9685878392803866722010-07-17T11:52:02.362-04:002010-07-17T11:52:02.362-04:00veenmr1 said.."On 7/1 the index traded in vol...veenmr1 said.."On 7/1 the index traded in volume higher than average and higher than previous day. The index closed significantly above midpoint of the 7/1 range (H 1033.58 L 1010.91 C 1027.37). This constitutes day one of an attempted rally.""<br /><br />So now a initial rally day doesn't even have to close UP on the day? Wow! Ridiculous. I'd love to see revised FTD stats using that new rule. I bet it's a big loser, statistically.Unknownhttps://www.blogger.com/profile/08542801042852133148noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-69923834670246523112010-07-14T14:18:23.888-04:002010-07-14T14:18:23.888-04:00V -
We'll have to just agree to disagree abo...V - <br /><br />We'll have to just agree to disagree about the July 1 "reversal". For my money it simply didn't exhibit the kind of behavior you would like to see on a reversal day.<br /><br />As far as the 70%-80% stat, it is a shame that link is dead. It was from an old interview, I believe. Anyway, in his book "24 Essential Lessons fo Investment Success", in Lesson #14 on page 81, whne discussing FTDs, ONeil states "About 20% of the time they can give a false buy signal", suggesting about an 80% success rate.<br /><br />I made the original tests as forgiving as possible and since 1970 the success rate isn't close to this.<br /><br />Best,<br />RobRob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-15295048241806360462010-07-12T22:48:34.203-04:002010-07-12T22:48:34.203-04:00I do not see what is fluid about it. Looking at a...I do not see what is fluid about it. Looking at a daily SP-500 price & volume chart. On 7/1 the index traded in volume higher than average and higher than previous day. The index closed significantly above midpoint of the 7/1 range (H 1033.58 L 1010.91 C 1027.37). This constitutes day one of an attempted rally. No need to complicate matters with intraday volume ("much larger on the way down than the way up") as this plays no role in the IBD prescription. The 7/1 low was not undercut the following day and thus the attempted rally remained intact. If the low had been undercut at any time after 7/1, that would have ended the rally attempt. On day 4 (7/7) a follow-through occurred as per IBD criteria. I do not see the stretch in their train of thought. Does it mean a sustained rally will follow? Of course not. Has there ever been a sustained rally without an FTD? Not according to O'Neil, and if his claim is correct then it seems obviously useful to track FTDs. <br /><br />On another front, I was not familiar with the IBD claim that "Follow Through Days carry a success rate of between 70%-80%", and the link to it in your earlier article is not working for me. Can you point me to the source?Thank you!<br /><br />BTW, I find your blog very interesting and useful, despite our disagreement about FTDs.veenmr1https://www.blogger.com/profile/16256689944541429661noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-86448346514019585232010-07-12T21:51:54.373-04:002010-07-12T21:51:54.373-04:00Thanks for the input veenmr1.
The "nonsensic...Thanks for the input veenmr1.<br /><br />The "nonsensical rule" that I was referring to was the one mentioned earlier that states days after day 10 are less reliable.<br /><br />The "wait until the 4th day" makes perfect sense.<br /><br />As far as claiming the rally began on 7/1, that is a big stretch as far as I'm concerned. Yes, it traded on high volume, but the volume was much larger on the way down than the way up. Closing "near the top of the range" is also quite a stretch. It wasn't even in the top 30% of its daily range, and it closed below the open and it closed down on the day. Further, it closed down again the next day.<br /><br />If IBD wants to claim the rally started on 7/1 so that they can call a FTD as early as possible in case a rally does emerge, then that's fine. As I've discussed, their rules are fluid. <br /><br />I'd suggest traders both review my posts related to follow through days and conduct their own research on them rather than accept IBD's claims.Rob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-86630191576447898342010-07-12T21:18:02.181-04:002010-07-12T21:18:02.181-04:00In IBD scheme of things the 7/7 FTD was on day 4 o...In IBD scheme of things the 7/7 FTD was on day 4 of an attempted rally because 7/1 (not 7/6) is considered as day 1. On 7/1 the index traded in high volume, reversed and closed near the top of daily range. There is nothing nonsensical about it. Rather, the "FTD before the 4th day" is a phantom caused by incomplete understanding of IBD's FTD rules.veenmr1https://www.blogger.com/profile/16256689944541429661noreply@blogger.com