I find that the process of only taking initial long entries on bona fide OWL set-ups and shunning breakouts usually puts me in the position of running out of things to buy as a market rally gets extended. As the environment goes from an initial target-rich state to a target-scarce state, that naturally causes one to back off on the long side. At that point you can just let the breakout buyers keep running things up for you.
The usual pattern we see in QE market rallies off a prior correction low is that initially the highest-velocity upside price moves occur right off the lows, or at least mid-way up on the route back toward the pre-correction highs. After a while, the upside velocity slows down a bit and we start to see stocks approach and even break out past their prior pre-correction highs. For me, this is the point at which I exercise maximum caution on the long side.
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