I’m writing this quick article halfway through the trading day on Wednesday, September 1st.
As of right now, it looks like we COULD be seeing a classic follow-through day. If the indexes end the day with this kind of strength and volume remains strong, this could mark the beginning of a new rally.
It’s not time to jump into the market just yet, of course. How we end the day is MUCH more important than where we stand halfway through the day.
Plus, if today does indeed end up being the follow-through day we’ve been waiting for, it’s important to remember that follow-through days have to “hold up” to truly signal a new uptrend. That means that if the market turns around after a follow-through day and takes out the previously-set lows, we’ll be right back in bear mode (or at least “undecided” mode).
However, what you SHOULD be doing right now is updating your watchlist.
Now would be a good time to review Chapter 3 and Chapter 8 in my book, Secrets of the Darvas Trading System.
In particular, make sure your watchlist includes the top-earning stocks (40% quarterly earnings increases or better) in the top growth groups, and make sure the stocks you’re eyeing are holding up ABOVE their 50-day moving averages.
Don’t rely on your watchlist from the previous rally. Some of those previous Darvas stocks have broken down and have too much work to do before making it back on your list.
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