Jerry Samet
06-08-2020, 06:29 PM
The market staged another strong rally today. The major averages opened higher and after a little early selling turned higher and rallied for the remainder of the session. All the major averages finished at their intraday trading highs, a sign of support. The gains were pretty evenly divided with the COMPQ and the NDX higher by 1.13% and .79% respectively. The SPX gained 1.20%. Volume was lower across the board. It declined 2.60% on the New York and 7.02% on the Nasd. This was of course above average and is compared to extremely heavy volume on Friday. Leading stocks again lagged the overall market. The leaders index gained .22% on the day and closed high in its trading range. The index closed just below its 9dma and the relative strength line of the leaders index has now fallen below its 50dma. Volume was lower and below average. The market continued its rally today. It not only held on to Friday’s large gains it built on them. The major averages rallied almost the entire day and late strength came in and saw them close at their highs. Volume was heavy, less than Friday’s, but it still showed that large institutional players were buying stocks today. Leading stocks again underperformed the overall market. I said Friday that this was the only real yellow flag right now and the underperformance continued today. The leaders index closed just below its short term 9 dma and the relative strength line fell below its 50dma. This shows some weakness in quality growth stocks. It is still a little early to get to worried about this, but the size of the yellow flag is getting bigger. The market looks really good right now and the gains should be building nicely. Experienced market operators know that things always look best late in a rally or even at a top. When you can’t wait for the market to close so you can check your accounts and see how much they are up you should exercise some caution. Things are starting to look a little frothy. This rally almost certainly has further to go, but we are a lot closer to the end than the beginning. Jerry