the comments expressed here are based upon study and...

© 2010 Investor’s Business Daily. All rights reserved. 1

Investor’s Business Daily, IBD, CAN SLIM and corresponding logos are registered trademarks owned by Investor’s Business Daily, Inc.

© 2010 Investor’s Business Daily. All rights reserved.

The comments expressed here are based upon study and interpretation of available data as it relates to our historical models of the best-performingstocks. This is not a prospectus; no effort on our part with respect to sale or purchase of any securities is intended or implied. Any chart appearingin this material is for educational purposes and is not, and should not be construed as a recommendation or rating to buy or sell any security. It ispossible that at this date or some subsequent date, the officers, directors and/or shareholders of Investor’s Business Daily, Inc. or their affiliates ownsecurities or buy or sell securities listed in the following pages, or those not mentioned.

• Why Market Bottoms Matter To Your Bottom Line

No Bull Market has Started Without a Follow-Through Day

• How to Use “Follow-Through Day” to Spot New Uptrend

• How to Make Money When New Uptrend Begins


To profit from new market uptrends…

“You must know when the storm is over and the market itself tells youto buy stocks again. You can’t go by your personal opinions, news oryour feelings. You must have precise rules and follow them.”

- William J. O’Neil, IBD® Founder & Chairman

Why Market Bottoms Matter To Your Bottom Line

• Snooze You Lose- Biggest gains made in early stages of new uptrend- Top stocks break out immediately or soon after follow-through day

• Fear & Uncertainty Can Make You Hesitate at Critical Time- Bull markets begin when everything looks bad- Don’t be distracted by news & personal opinions

• Follow-Through Day Gives You Fact-Based Signalto Get Back into Stocks


Spotting Market Bottoms is Easy with IBD

Check Market Pulse graphic in The Big Picture for alerts tofollow-through days and changes in market direction.

- No bull market has started without a follow-through day- Most reliable, time-tested indicator of new uptrend- Lets you rely on rules instead of emotions

to Get Back into Stocks

How Leading Stocks Broke Out Near March 2003 Follow-Through

Nasdaq Daily Chart3/12/2003 Follow-Through

OVTI

Follow-Through Day

NFLX, IGT, CECO

(AVID) Avid Technology(CECO) Career Education(CTX) Centex Corporation(DKS) Dick’s Sporting Goods(HAR) Harman Int’l Industries(HITK) Hi Tech Pharma(HOV) Hovnanian Enterprises(IGT) Int’l Game Tech(MATK) Martek Biosciences(NFLX) Netflix(OVTI) OmniVision Tech(SINA) Sina.com(SOHU) Sohu.com(TEVA) Teva Pharmaceutical(UNTD) United Online

MATK

NTES, UNTD,SOHU, HITK

HAR

SINA


OVTI

TEVAUOPX HOV, JCOM

(UOPX) Univ. of PhoenixDKS

CTX, AVID

Follow-Through DayAre you prepared to make big gains?

• Have watch list ready when new uptrend begins

• Biggest winners break out on follow-through day or soon after


IBD Shows You When to Get Into – and Out of – the Market

How IBD has alerted readers to major market shifts, 2000 - 2009


How to Use “Follow-Through Day” to Spot New Uptrend

• In correction, market tries to rally. Some rally attempts fail.

What is a Follow-Through Day?

• Tells you it’s time to buy stocks

• Successful rallies have follow-through day: Signals change from“market in correction” to “market in confirmed uptrend”


How to Use “Follow-Through Day” to Spot New Uptrend

• In a correction, when market makes new low, look for first day market closes up fromprior day. Normally day one of rally attempt.

How to Spot Follow-Through Day

As long as index stays above prior low, attempted rally remains in place.

Key Elements of Follow-Through Day

g At least one major index* closes up app. 1.5% - 2% or more on volume heavier than prior day.

*Major indices: S&P 500, Nasdaq Composite, NYSE Composite, or Dow Jones Industrials


*Major indices: S&P 500, Nasdaq Composite, NYSE Composite, or Dow Jones Industrials

Volume does NOT have to be above average; just higher than prior day.

g Typically occurs anytime from Day 4 or later in a rally attempt

Can happen as early as Day 3, but first 3 days usually too soon to confirm new uptrend

2006 NasdaqFollow-Through Day

Follow-Through Day Day 21 of rally

Day 2: Big gain on volume heavierthan day before BUT too early tobe follow-through day. Days 5 - 20: Market direction

unclear. Be patient & wait forfollow-through.


Day 1 of Rally Attempt: Market hitsnew low, and closes up for day.

Days 3 & 4: Market declines, but doesn’tundercut low. Rally remains intact.

follow-through.

Patience Pays Off

Follow-Through Day

Nasdaq gains 19% in 5 months after follow-through

Daily Chart


Follow-Through Day

Breakouts of Selected Leadersin 2006 Nasdaq Follow-Through

Be Prepared!

Don’t miss big winners thatbreak out first

Start building your watchlist BEFORE follow-through day


Follow-Through Day

(AAPL) Apple(BLUD) Immucor(BDC) Belden(CNS) Cohen & Steers(CPA) Copa Holdings(DRIV) Digital River(GS) Goldman Sachs(IAAC) Int’l Assets Holding(ICE) IntercontinentalExchange(VIP) Vimpel-Communications

History, Not Hunches: 1974 Follow-Through Day


Volume heavier thanprior day.



Volume heavier than prior day.

Market down, but doesn’t undercutprior low. Rally still intact.


It Pays to Wait!Successful follow-throughcomes one month later.

Failed Follow-Through Day:Big distribution day soon after


Big distribution day soon afterfollow-through spells trouble.


Ignore the News. Follow the Market.After-effect of dotcom collapse, badeconomic news and pending Iraq Warscared off many investors even asmarket took off.


Not All Follow-Through Days Leadto Sustained Uptrend

• About 25% - 30% fail fairly quickly (within few days or weeks)

Follow-Through Day 6/29/06

Distribution days on days3 & 5 of new uptrend

Failed Follow-Through, Nasdaq 6/06

Distributions days (i.e., days of heavy selling) soon afterfollow-through spells trouble for new rally.

Beware of Distribution Days!


Market sells off and enterscorrection.

Easily track distribution daysin new uptrend with IBD’sMarket Pulse on page A1.

Beware of Distribution!

June 29, 2010 Follow-Through DayFollow-Through Day 6/2/10 Day 4 of rally attempt.

Nasdaq Daily ChartMay – June 2010

Day 1 of Rally Attempt (5/27):First day up after market hit newlow 2 days earlier.

Distribution Day 1 (6/4): Bad omen.Came two days after follow-through.Outlook in Market Pulse changes to“uptrend under pressure.”

Distribution Day 2 (6/8):


Distribution Day 2 (6/8):Undercut recent low. Outlook inMarket Pulse changes to“market in correction.”

Don’t Rush In After Follow-Through!

Get back in to the market gradually. Pull back ifdistribution mounts or your stocks act poorly.

How to Make Money When New Uptrend Begins

4 Identify leading stocks breaking out of sound bases

First stocks out of gate in new uptrend tend to become biggest winners. Don’t miss them!

Start Building Your Watch List BEFORE Follow-Through Day!

Preparation during a correction pays off in new uptrend

4 Get back in gradually Don’t rush back in all at once.

Example: Start by buying 50% of normal position. If stock gains 2%, add 30% - 35%. If it


Example: Start by buying 50% of normal position. If stock gains 2%, add 30% - 35%. If itrises another 2%, buy rest of position.

Minimize risk by making your stocks - and new market uptrend - prove themselves.

4 Watch for distribution early in uptrend Distribution days soon after follow-through day can mean new uptrend will fail. Check distribution day count in IBD’s Market Pulse on page A1 every day.

Coming Next Month…

Lesson 3: How to Read Charts with Skill and IdentifyCorrect Buy Points

You’ll learn:

aWhy chart-reading gives you a huge advantage in selecting winning stocks

aHow to pinpoint the best time to buy a stock using simple techniques

aHow to quickly “see” if big institutions are buying or selling – and why that matters

…and more!


…and more!

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Investor’s Business Daily, IBD, CAN SLIM and corresponding logos are registered trademarks owned by Investor’s Business Daily, Inc.

© 2010 Investor’s Business Daily. All rights reserved.

The comments expressed here are based upon study and interpretation of available data as it relates to our historical models of the best-performingstocks. This is not a prospectus; no effort on our part with respect to sale or purchase of any securities is intended or implied. Any chart appearingin this material is for educational purposes and is not, and should not be construed as a recommendation or rating to buy or sell any security. It ispossible that at this date or some subsequent date, the officers, directors and/or shareholders of Investor’s Business Daily, Inc. or their affiliates ownsecurities or buy or sell securities listed in the following pages, or those not mentioned.

the comments expressed here are based upon study and...

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