tag:blogger.com,1999:blog-2676650858658561710.post1834137867211617016..comments2023-11-02T06:14:07.871-04:00Comments on Quantifiable Edges: IBD Follow Through Days pt. 1 - Are they predictive?Rob Hannahttp://www.blogger.com/profile/07596674657839065754noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-2676650858658561710.post-29272413110847090682008-09-18T19:07:00.000-04:002008-09-18T19:07:00.000-04:00I know this is an old post but intriquing nonethel...I know this is an old post but intriquing nonetheless. I am curious in you study of IBD follow through days. IBD uses them in part to declare a "confirmed rally" after a downturn -found in their "The Big Picture" column. Have you compared your identification of a "Follow-through" day to IBD changeover to a "confirmed rally"?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-869728860823344212008-05-26T13:36:00.000-04:002008-05-26T13:36:00.000-04:00I was attempting similar research but stopped due ...I was attempting similar research but stopped due to the subjective nature of FTDs. For example, the 1/31 Nasdaq jump of 1.7% on higher volume did not trigger a FTD due to leading stocks being nowhere near forming constructive bases.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-54497998979062085152008-01-29T23:49:00.000-05:002008-01-29T23:49:00.000-05:00I just wanted to note that I've needed to make a s...I just wanted to note that I've needed to make a small change to this study due to some bad volume data I had which was recently noticed. In the original post, the "success" rate with my favorable tweeks was about 52%. It is now 55%. There were a small number of Dow FTD's that didn't originally appear. This has been fixed and 1% FTD's are now 35 of 64 instead of 33 of 63. Without my favorable tweaks, success is still about 50%.<BR/><BR/>RobRob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-77181699847230078432008-01-17T16:14:00.000-05:002008-01-17T16:14:00.000-05:00Following up on Tim's comment, I'm curious if you ...Following up on Tim's comment, I'm curious if you are interested in verifying the O'Neil claim that no bull market has ever started without a follow-through day (specifically on days 4 - 10, since obviously a bull market would eventually clock a gain on high volume).<BR/><BR/>-BernieAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-64581536252278724902008-01-16T09:09:00.000-05:002008-01-16T09:09:00.000-05:00Even with a success rate of approx 50%, no bull ma...Even with a success rate of approx 50%, no bull market has started without a follow through day. That alone is worth following this indicator. Also, I believe it was Bernard Baruch that said something along the line that a person only needs to be correct 3-4 times out of ten to yield a fortune if they keep the losses small and winners large.<BR/><BR/>Good work though.Timhttps://www.blogger.com/profile/09080958568425654987noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-21202756151084308412008-01-15T22:36:00.000-05:002008-01-15T22:36:00.000-05:00IBD using a 1.7% gain for the follow through day i...IBD using a 1.7% gain for the follow through day is a recent criteria - possibly started in 2004. IBD used 2% for a few years - possibly from 2000-2003. The first rally day does not have to close higher than the close of the previous day, but rather can just close in the upper half of the range. A follow through day can occur on day three if days 1-3 all have strong price gains and strong volume. See pages 64-67 of How to Make Money in Stocks (third edition, copyright 2002).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-19984110233767820102008-01-15T16:57:00.000-05:002008-01-15T16:57:00.000-05:00Thanks for the clarification Rob. I used to read y...Thanks for the clarification Rob. I used to read your posts on TM.com. Nice work. it's nice to see a factual study of a methodology.<BR/><BR/>Even though these results of the FTD are less than impressive, I still like the IBD method of stock picking since it combines basic company fundamentals and basic technicals, nothing fancy. Growing fundamentals with growing demand for the stock makes the most logical sense to me. <BR/><BR/>I'd like to see someone tackle the enormous task of verifying the success of a 8+ week or more cup/handle breakout on big volume. I always think that this is a valid and very profitable pattern, but I have to allow that I might have a bias in my observation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-42042880531694373992008-01-15T16:53:00.000-05:002008-01-15T16:53:00.000-05:00Pradeep - This will be my last attempt to explain ...Pradeep - <BR/><BR/>This will be my last attempt to explain this. Day 1 is the day of the potential bottom. Any time the market rises after it has been downtrending it is possible a bottom is being made. No one is trying to predict a bottom at that point. They are just labeling Day 1 in order to start the count in search of a FTD. I do not have "24 Essential Lessons" handy but I am confident that "How To Make Money In Stocks" along with several articles written by Investors Busines Daily confirming this should be enough to satisfy anyone. I will stand by my study regardless of your interpretation of O'Neil's writing. <BR/><BR/>Regards,<BR/>RobRob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-501784127042520662008-01-15T16:23:00.000-05:002008-01-15T16:23:00.000-05:00See "24 essential lessons for investment success"P...See "24 essential lessons for investment success"<BR/>Page 76 to 81Pradeep Bondehttps://www.blogger.com/profile/16750002566366368685noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-78217013939628593412008-01-15T16:15:00.000-05:002008-01-15T16:15:00.000-05:00Pradeep,That is not what his book says. From "How...Pradeep,<BR/><BR/>That is not what his book says. From "How To Make Money In Stocks", second edition, copyright 1995, page 59:<BR/><BR/>"The bottom day in the Dow Jones OR the first strong day up after a major decline is usually the first indication of a possible bottom. A good follow-through...accompanied by an increase in the daily volume from the day before, will usually be on the fourth, fifth, sixth, or seventh day of the attempted rally. This is your second confirmation and main buy signal."<BR/><BR/>Volume is neccessary on the follow-through day. Not Day 1. Please refer to the links to IBD articles I provided to confirm this further.<BR/><BR/>Regards,<BR/>RobRob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-79096853819993442752008-01-15T16:03:00.000-05:002008-01-15T16:03:00.000-05:00If you read his first or second book the 1st attem...If you read his first or second book the 1st attempt day has to be up day with volume higher than previous day and preferably above 50 day average volume is what he says.Pradeep Bondehttps://www.blogger.com/profile/16750002566366368685noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-25553771607584667332008-01-15T15:23:00.000-05:002008-01-15T15:23:00.000-05:00Pradeep - Thanks. Your definition matches mine ex...Pradeep - <BR/><BR/>Thanks. Your definition matches mine except for two points. First, there is no volume requirement for Day 1. You may refer to the IBD links I included in the post or O'Neil's book for confirmation of this. Second, Day 10 is not an absolute cutoff. I will be examining FTD's after Day 10 in detail in a later post.<BR/><BR/>Regards,<BR/>RobRob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-43062332256974239412008-01-15T14:57:00.000-05:002008-01-15T14:57:00.000-05:00The follow through day definition. * Market in ...The follow through day definition.<BR/><BR/> * Market in downturn.<BR/> * First there is a up day which closes higher than previous day. Volume is higher than previous day. That is when you start counting. (Attempted rally day 1)<BR/> * From that day 4th to 10th day a 1.7% plus up day on higher volume than previous day and higher than 50 day average volume is confirmed follow through day.<BR/> * And during the period between the 1st rally attempt and the follow through, the market should not trade below the first rally day attempt low.Pradeep Bondehttps://www.blogger.com/profile/16750002566366368685noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-71441127026035001292008-01-15T14:44:00.000-05:002008-01-15T14:44:00.000-05:00Dave M,The count was done as follows...from http:/...Dave M,<BR/><BR/>The count was done as follows...<BR/>from http://biz.yahoo.com/ibd/080103/corner.html?.v=1<BR/><BR/>"Here's how it works: The first up day from a bottom in the major indexes is Day 1 of an attempted rally. If the previous low is undercut, the count returns to zero. If the low isn't undercut, the count for Day 2, Day 3, etc. continues. If on Day 4 or later, the market closes up sharply on higher volume than the previous session, then the market has registered a follow-through day."<BR/><BR/>I only allowed for Follow Through Days to qualify starting Day 4 as per IBD. While IBD claims FTD's after day 10 are less reliable, they were counted since IBD still counts them. One part of my series on FTD's will address specifically FTD's after day 10 and if in fact they are less reliable. (Probably Study #5 as I layed out in the intro piece.)<BR/><BR/>Regards,<BR/>RobRob Hannahttps://www.blogger.com/profile/07596674657839065754noreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-27016613936488856732008-01-15T12:30:00.000-05:002008-01-15T12:30:00.000-05:00Perhaps you missed some key factors. Did you accou...Perhaps you missed some key factors. Did you account for the fact that the follow-through day must be between the 4th and 10th trading day after the bottom day? IBD always says history shows that a follow through day after day 10 is much weaker as an indicator. <BR/><BR/>Also, what factors did you use to define a bottom day?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-56073344598394783382008-01-14T16:11:00.000-05:002008-01-14T16:11:00.000-05:00ditto Bill! (including the 30-60 part ;-)ditto Bill! (including the 30-60 part ;-)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2676650858658561710.post-87971559850328611222008-01-14T13:50:00.000-05:002008-01-14T13:50:00.000-05:00Hi Rob,Some truly superb work in this space. Coun...Hi Rob,<BR/><BR/>Some truly superb work in this space. Count me as an early fan. In fact, I like what you've done so much that I have waived my usual 30-60 'trial reading' period and added you to my blogroll today.<BR/><BR/>Looking forward to more...<BR/><BR/>Cheers,<BR/><BR/>-BillBill Lubyhttps://www.blogger.com/profile/01241003017364820134noreply@blogger.com