Investor Business Daily model follows the model of distribution and follow-through days based on volume as follows:
Distribution days: A distribution day is defined as a day in which the move by the index is moves -0.5% on stronger volume than the previous day.
Follow-Through days: On Day 4 or later of the attempted rally, at least one of the key market indexes must deliver a strong gain in volume up from the previous day. That big gain in rising volume is the follow-through day, which confirms that a new uptrend is underway.
A follow-through day can't pick the exact day that a market bottoms, but it can get you in close to the bottom.
Because this model is intended to value the market health, and how market-makers are positioning themselves, this cluster historically signifies a more defensive market.
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A follow-trough day was made yesterday September 30th. ----> BULL
We would deny this pattern and most likely the rally, if we break-down below June highs, or 100sma.
Dorfmanmaster, Any chance you could share your script for follow through days? I am a fan of William J. O'Neil but relatively new to Pinescript and would appreciate any help.
Mando
Mando