8-23 morning comment

If we are experiencing a positive test of prior lows we could see a follow-through day. Today is day-11 count. We look for a day where a major index (NASDAQ, S&P, NYSE Composite) closes up significantly on volume higer than the day before on day 4 or later. We are currently running about equal to yesterday's volume. How high must an index close up? Something like 2% at this period of high volatility.

The reason we wait until day 4 or later from a bottom is that short covering causes confusion relative to the longer term buying posture of institutional investors.

A primary factor is missing however. Bases of leading stocks are not set up in constructive bases. So from a strict canslim basis a FTD could be a junk-off the bottom rally.

If you haven't looked at the Gold Top Finder post by EB, look at it. Gold may be coming off with the money going back into equities.

Thank you for these regular comments, Mike. I look forward to reading them whenever you get time to post and it is a joy to learn from someone as experienced as you.

Your input regularly proves that leading stocks often do show the way for the general market (if not right away, then soon enough).