Followthrough days (FTD) are a measure of market trend strength. There has never been a major market rally without one, but not all follow though days precede strong rallies. You can see that some fail in the chart above. And when they do, swift moves lower typically occur. FTD shows buying strength and a bullish tailwind. They suggest an internal risk on atmosphere from an intermediate term time frame.
To that end, SP 500 sector moves shows risk-on:
From a longer term trend perspective, the SP 500 has made a lower low from August. This is half confirmation of a new longer term downtrend. The other half is a lower high. The lower low itself shows longer term trend weakness. The SP 500 still remains below resistance at its 50 day SMA and a broken trend line. On the following weekly chart, I note a bullish candle and areas of overhead resistance.
Seasonally, October is historically a terrible month for US stocks. The Panic of 1907, the 1929 crash, and Black Monday of October 1987 all occurred during October. But into November and December, seasonality turns decidedly bullish. The follow-through day may be the first and earliest sign of an into-Xmas rally.
So their is is alot going on. Longer term, there is a lower low in place on the SP 500 with overhead resistance at both the 50 day SMA and the nearly two year up trend line broken early this month. Yesterday's follow through day is bullish intermediate term, as was the sharp move above the 200 day moving average which now acts support for pullbacks. Short term, the market is very overbought shown on the NYSE McClellan.
Tactically, I am looking to add long side risk in all time new high growth leadership. I am willing to add risk on pullbacks given the follow through session yesterday. Some names sporting large fundamentals and strong technicals include RGEN, HQY, GMCR, and PANW.