12-21-11 Comments

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I have been a little distracted with an ailing father lately. Yesterday was a FTD on all major indices. I have attached the Market School Chart. In addition I attached a word document that documents a study several of us performed a few years ago. This study identified three market conditions or indications that tend to confirm the liklihood of success that a FTD will produce a significant rally of five weeks or longer. Two of those indications yesterday were not supporting jumping into this market, at least in a big way.

Two factors that could that could give us advance warning of a failing rally are:[INDENT]1 A close below the FTD low. As I write this the NASDAQ is trading below yesterday's low price of 2566.87. If we close below this level we will get an S1 sell signal and the exposure count will go to zero.

2. Any distribution day within three days after a FTD often leads to high incidence of a rally failure [/INDENT]