Leaders Index 2-22-16

The market had a very strong open today and held those gains for the rest of the session. The major averages made their intraday highs in the first fifteen minutes of trading and then traded sideways for the rest of the day. This is a sign of some strength as there was no selling into the rally. All the major averages finished at their intraday highs, another sign of support. The COMPQ was up by 1.47% while the SPX gained 1.45%. Volume was the real issue today. It was lower across the board and well below average on both exchanges. Leading stocks were higher as well with the leaders index rallying .83% on higher but still below average volume. The index closed in about the middle of it’s intraday trading range and the red candle shows that the index finished below it’s opening price. It was a new high on both a price and a relative strength basis. The big price move today strengthens the rally attempt. We have now three days since the follow through without any distribution, which is a positive for any rally. The real negative was the fact that there was very little volume, showing that large institutional players were not really participating in today’s action. The next real hurdle for all the major averages is the 50dma. This declining moving average is now 2.5% above the COMPQ while it is only .3% above the SPX. The real test now is can the major averages break above this important moving average. If they can’t the rally is likely about over. If they clear this resistance the rally will have further to go. Jerry