The Bulls obviously liked the ADP report today, and succeeded to push the indexes up enough to record a follow through day. William O’Neil and Investor’s Business Daily use the follow through day as an entry signal following a market correction. I was shocked that IBD modified their entry criteria (IBD Abandons Their System and Places Market in Confirmed Rally) when they recorded a follow-through day last week. Had they just waited patiently, they would have gotten their follow through day without modifying their methodology.
The rally today was impotent. More of the same: big moves accompanied with slack volume. The Nasdaq, otherwise known as the main bull cheerleader, still sits ~35 points below it first area of resistance.
The action reminds me of when I used to live in Georgia. I lived next door (well, several hundred acres away) from an Emu farm. I would help the farmer “harvest” the Emu. The Emu were kept within fenced enclosures 20 feet wide by 60 feet long. The owner would put on a cup, combat fatigues, and combat boots. His name was Jeff, and he was about 6 foot tall and 225 lbs. He would sneak up behind a huge bird and jump on its back, much like a cowboy from behind a horse. Wrapping his hands around its long neck, the bird’s legs would fold beneath it, and he would force it too the ground. Once on the ground, he kept one hand on the base of its neck and used his other hand to stretch the bird’s neck out on the ground.
Now, I’m sure you’re wondering just how we did the bird in. You’re probably thinking that us dumb Southerners would use a dull machete to lop off the bird’s head. Or even an axe. Even considering such a method shows how little you know about Emu.
By far, the preferred method of slaughtering the bird was with a .45, point blank. Once the bird was settled down with its neck stretched out, I would put the barrel of the pistol between its eyes and pull the trigger.
Now, let me bring this back to the market action.
Once I pulled the trigger, Jeff and I would simultaneously jump up and run as fast as we could to the gate of the pen. You see, chickens really do run with their heads cut off. And chickens that weigh 100 lbs, run 30 miles per hour, have 3 big talons, and jump 6 feet high, are fairly dangerous when their heads are blown clean off. Seriously, those birds would absolutely destroy their pens, ripping apart commercial grade fencing, all with no heads. Simply put, life is often not extinguished like a flame between moist fingers. Often, death is not a peaceful giving-in but rather a violent struggle against an indomitable foe.
Such is the market.
Enjoy these death throes, bulls.
Until resistance is broken, you’re all still running around with your heads blown off.