Follow-Through Day

A follow-through day is identified when a major index (Sensex or Nifty 50) closes significantly higher, over 1.5% for the day, on higher volume than the previous session. It happens on fourth day or later of an attempted rally. The most powerful follow-through days often happen on fourth through seventh day of an attempted rally. They serve as a confirmation that the market has really changed direction and is in a new uptrend. The strength in a follow-through day can be gauged by the action in leading stocks. A follow-through day coupled with leading stocks breaking out from their base patterns provides signs of a sustainable rally. A follow-through day is a key concept in the market-timing system developed by MarketSmith founder, William J. O’Neil.