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Follow-Through Day Tutorial with Examples

When there is a market correction, it’s important to wait for a confirmation that an uptrend is underway before scaling back in. A follow-through day is the signal we are looking for.

Below is a short tutorial on how to determine when a follow-through day (FTD) has occurred. This includes the required rally days prior to an FTD as well as early signs a failure may occur. You’ll also find several annotated charts showing an index low, how to track the prerequisite rally and pinpointing where an FTD begins.

If you’d rather not get wrapped up with the specifics, you can follow me on Twitter where I’ll post as soon as we have a FTD.

Many thanks to Mike Webster for clarifications and updates.

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David Ryan on the Telltale Signs of a Correction

On a recent IBD Investing podcast, Irusha Peiris and David Ryan walked through a number of clues that may indicate we are heading into a correction. The chart of QQQ was used as many of recent leaders can be found in the Nasdaq 100.

I annotated a chart of the key points and added some additional notes as it relates to the moving averages and RS Line.

It’s important to note, these same principles apply regardless of the index, so I’d recommend keeping this information handy for future reference.

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TSLA Swing Trades

Given how quickly TSLA can move, in both directions, at this point I’m more comfortable with swing trades over a position trade. With that said, had I purchased TSLA in the $100-$200 range, I’d probably have a completely different perspective.

All the details of my swing trades are shown in the image that follows:

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Quarterly EPS Shown as a Line Graph

One aspect I really appreciate of charting apps that offer custom coding capabilities is that you can present information visually that typically is not shown in that manner. For example with a few lines of thinkscript code you can plot a line graph of quarterly EPS in thinkorswim.

What follows is a screenshot of the line graph I wrote in less than 30 lines of code. The red and green dots represent the quarterly earnings, indicating if the current results were up/down from the previous report. I also appended at the bottom of the image the optional EPS bubble.

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Bucking the Trend – RS Line New High Screen

The Nasdaq has been on a steady decline since last Thursday (9/3/2020). Today the Nasdaq officially closed below both the 50-day and the 10-week moving averages.

How about a screen looking for stocks bucking the trend? This screen focuses on:

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