The market has now failed on its second follow-through day since the current correction began in early October. This only adds weight to my view that follow-through days are useless contrivances in this current market environment, and ever more the reason to refrain from relying on them as green lights for piling into the market on the long side. I can almost hear the notorious character Gordon Gekko in the original Wall Street movie, admonishing investors, “Follow-throughs are for sheep, and sheep get slaughtered.”
At least in this market, that certainly seems to be the case. The rally off the Thanksgiving lows, was, however, tradable, for those using Ugly Duckling set-ups such as downside gap-fills and undercut & rally entries. Over the weekend, the futures foretold of a magical Monday opening, which was impressive with the Dow Jones Industrials gapping up some 450 points right off the open. But, as I indicated in my Sunday evening video report, one could not buy a big gap-up move in anything given the already sharp moves off the lows of nearly two weeks ago – that was simply too risky.
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