Second day follow through id driven by residual buyers, newsletter followers or slow reactors. Buying proper momentum burst setups in these your trend first or second or third time works . Here is a profit line from taking up to 6 momentum burst longs per day for the past 10 years, 1000 shares per trade, using simple mechanical rules. Daily MACD, still above the zero-line and the signal-line, continued to slide lower and its histogram also further contracted downward, indicating further decline in the index’s daily momentum. Even though the market has undergone a lot of evolution, the basic workings are still intact. Because of the nature of the overall markets (they have significant positive bias), there are in number terms more bullish momentum bursts than bearish momentum bursts. It has been observed and verified that boutiques s move in momentum bursts during bullish periods in indexes (bull markets). They go down in momentum bursts of 3 to 5 days.
The Dow Jones Industrial Average closed at 9324.69 on 10/31/08, as investors bought stocks and put together back to back positive days on the Dow Jones for the first time in a month. To find stocks likely to go up multi month or year I use other methods. But same stock when it is up say 6 month and trading near its high and all time high at some stage buying a extended move on that kind of stock will likely hasten your death as a trader. The most important thing to remember as swing trader is that always buy range expansion at beginning of swing move. Buy range expansion if stock is not up 3 days in a row. Buy range expansion early in a trend. Rest of the time the stock might retract or go in range. The bearish breakdown trade works best after a downtrend is clearly established on 10 plus day time frame. On the heels of Friday’s rally, it marked the first time that the S&P 500 notched back-to-back gains of 1% or more since June. Buffett’s team reported its first purchase of RH in November 2019. Though this stock was showing a loss during the market swoon early in the year, it has seen massive gains since the March lows.