Jerry Samet
01-08-2015, 11:22 PM
The market gapped higher at the open today in a continuation of yesterday’s strength. All the major averages closed near their intraday highs. The gains came early and then they held on for the rest of the session. The COMPQ was up by 1.84% while the SPY climbed 1.79%. Volume was higher across the board and and was above average on both the New York and the Nasd. All the major averages regained their 50dma’s with some conviction, which is positive. Leading stocks had a good session as well with the leaders index rising 2.62% on higher but still below average volume. The index regained it’s important 17dma and closed near it’s intraday high. This was clearly an accumulation day, but IBD called it a follow through day that confirmed a new rally and wiped out all the distribution days. I think that is a bit of a stretch, but it was a positive session. There were a few stocks that had good breakouts in the last couple of days, but we have seen this movie several times before in the last year. I did my review of last years trades this week and could easily see the pattern of rallies to new highs followed by nasty declines and then rallies to new highs again. None of those rallies got very far or produced many big winners and I am not holding my breath waiting for this one to be any different. Any position taken on this follow through should be done carefully and position sizes should be less than normal to protect capital. We will have to see how this one plays out, and when you least expect it you sometimes get a tradable rally, but recent history would suggest caution. Jerry