Jerry Samet
01-01-2013, 12:07 PM
The market rose strongly yesterday in a relief rally on news that a deal had been reached to avoid tax increases on most people. It was a very stripped down deal that leaves much to do in the next couple of months but it solved the problem for the moment. That was enough for the market to rally for the day. All the major averages were up strongly with the COMPQ leading the way with a 2% rise. Volume was surprisingly strong for the last trading day of the year and rose across the board. This took all the major averages back above important moving averages as they closed at the highs of the day. We had a follow through like day and IBD went back to confirmed uptrend but it happened more than 25 days after the rally day so the MEM did not add a point. There was a Eureka signal on the session, but historically these signals so late in a rally tend to be negative as they say we are much closer to the end of a rally than the beginning. Leading stocks slightly outperformed the major averages as the leaders index rose 2.1% on both higher and above average volume. The RS line of the index hit a new high and it rose back above the important 17dma. The deal put together yesterday was a pretty bad one as it does nothing to cut spending and the sequestration was delayed for two months. We will see another big fight over this sequestration and the debt limit in a couple of months, but for now even this stripped down deal was enough to cause a relief rally. I hope everyone has a good new year and that 2013 proves profitable for all of us. Jerry