Jerry Samet
07-08-2017, 11:47 AM
The market staged a nice rally yesterday, at least on a price basis. After a better than expected employment report before the open the major averages opened higher and rallied for most of the rest of the session. The major averages pretty much reversed Thursday’s losses and all closed high in their intraday trading ranges. The COMPQ was higher by 1.04% while the SPX gained .64%. The real problem was volume. It was lower and below average on both exchanges. This is not what you want to see on a rally day. Leading stocks rallied strongly as well with the leaders index gaining 2.95% on the day and closing high in its trading range. The index regained its important 50dma and also closed above its short term 9dma and 17dma. The relative strength line of the index also broke above its 50dma. The problem here, as it was with the major averages, was volume. It was lower and below average and the lowest in two weeks. This shows that large institutional players were not heavily involved yesterday. The action of both the major averages and quality growth stocks continued the recent pattern of higher volume on declines and lower volume on rebounds. This shows that institutional players are more active on the declines than the advances, a pattern of distribution. The SPX regained its 50dma and the COMPQ is just below this now resistance level. We need more solid up days on a price basis accompanied by strong volume to really improve the picture. We have not seen that action yet. Jerry