Buyers keep their heads up as major indexes tag their 200-day moving averages.
The 200-day moving averages are like magnets to price action. No surprise to see a test.
What we’re looking for now is indication that institutional grade investors are willing to place large bets at these price levels.
Beginning last Friday, we began looking for a Follow Through Day, where at least a 1.7% rally on volume greater than the day before for at least one of the major indexes would tell us the big boys are piling in.
Per William O’Neil, founder of Investors Business Daily, ever major bull move had had a Follow Through Day. But not every Follow Through Day leads to a sustained move.
Wednesday’s broad based rally saw the major indexes up more than 2%, but lack of volume tells us the move may be vulnerable.
In individual stock action for Thursday, Tech stocks Dell (DELL), +5%, Google (GOOG), +2.5%, and Cisco Systems (CSCO), +1.5%, helped lead the big caps higher.
On the Growth Stock front, Lululemon (LULU), +5%, Mercadolibre (MELI), +5%, and Akamai (AKAM), +4%, led a strong group as they flirted with highs.
Successful breakouts have been a rarity in this market. Perhaps this new crop will set a new tone.