Quote Originally Posted by Ken View Post
Hi Mike,

Doesn't the break on 6/21 also triggered S9 signal with the break below 50D ? Also, is there any statistics that speak to distribution days within a certain days of an FTD and its implication to rally success ? The current action is somewhat similar to 12/20/11 FTD where we had S1 distribution signal the next day 12/21 but it turned out to be a good bull run so my guess is as long as the DD are not back to back, the rally case is still on.

Also, does the behavior of leading stocks override some of the exposure decisions in this model ? We seem to have good money rotation into fresh leading issues such as ALXN, PCYC, TRIP, FB. A lot of the old leaders seem almost ready to move again now with decent base in place AAPL, AMZN, LNKD, KORS, MA, PCLN, CMG, ULTA. Overall a mix bag but the breakdown on the early leaders from 6/5 bottom are showing concerning signs: LQDT, BBBY, UA, MNST, REGN, SXCI, CERN, MLNX, EQIX.

Thanks-
Ken
Ken, the break below the 50-day was not an S9 sell signal. Before we can have an S9 there has to be a prior B6 (lows above the 50-day). This relationship is to prevent signal churning around the 50-day.

Here are the distribution statistics presented recently at an IBD seminar I have done similar research with nearly the same results:
Distribution day 1 or day 2 after a FTD: 95% rally failure rate
Distribution day 3 after a FTD: 80% rally failure rate
Distribution day 4 or 5 after a FTD: 30% rally failure rate

As you noted distribution right after a FTD doesn't mean 100% failure...

Action of leading stocks is very important and is the final arbiter of whether we are in a confirmed uptrend. This is somewhat subjective and takes experience to know when enough leadership is there and whether they are coming under pressure. I track breakouts which has been looking okay except for the fact that the breakouts that occured on or after the FTD are on average below their buy points. Stocks that broke out in advance of the FTD are up okay. So from a leading stock situation I would say they are under pressure.