Jerry Samet
02-18-2016, 07:13 PM
The market took a bit of a rest today after three days of solid advances. The major averages opened up little changed and drifted lower the rest of the session. The COMPQ finished with a decline of 1.03% while the SPX fell .47%. Both closed very close to the bottom of their intraday trading ranges. The real story today was volume. It was lower across the board, meaning there was no distribution today. This is very important as distribution right after a follow through is almost always fatal. We must also avoid distribution for the next couple of days. Leading stocks performed better than the overall market, with the new leaders index gaining .35% on lower and slightly below average volume. The index closed just below the middle of it’s trading range and the red candle means that the index closed below it’s opening price. The relative strength line of the index continued into new high ground. Today’s action was constructive due to the measured decline and the lower volume. If volume had been higher it would have been very bad. A decline like today’s is pretty normal after three strong rally days. So far the action in the major averages is ok and this rally attempt looks alright so far. The decline today will not help the weekly Coppock signal and confirm yesterday’s follow through. The problem now is individual stocks. There is virtually nothing to buy as few if any stocks are looking attractive. This should help maintain a large cash position until we can see in the next few days if the current action has legs. Jerry