Jerry Samet
01-07-2015, 11:21 PM
The markets gapped open today and rallied strongly the entire session. All the major averages closed at their intraday highs, a positive sign. The COMPQ led the way with a gain of 1.26% while the SPY gained 1.18%. Volume was lower across the board and was above average on the Nasd and slightly below average on the New York. This shows that there was not as much buying enthusiasm today as there was selling pressure yesterday. Leading stocks had a good session as well with the leaders index rising 1.65% on lower volume than yesterday and well below average. The index at it’s intraday high almost tagged the 17dma. It would be encouraging for the index to break above this important moving average, especially with conviction. After a sell off it is important to watch the quality of the bounce. Today’s bounce was ok on a price basis but the volume was lacking. It would not be unexpected to see the major averages rally back to the 50dma that they just broke under. If they get close to this moving average(and as of this writing the the futures were rallying about .70%) and can’t get back above it then that will be a very negative sign. When a stock or an index breaks an important moving average and can’t get back above it lower prices are usually ahead. We could get a follow through day in a couple of days, but given the recent history of follow throughs and moves to new highs I would not get to excited if it did. It looks like we are in broad topping pattern that is typical of the very late stages of cyclical bull markets. We had another Hindenburg Omen signal yesterday and just missed one on Wednesday. There are some charts setting up bases, but the chances of achieving real gains right now are slim. Jerry