Leaders Index 10-27-17

The market staged a powerful rally yesterday following strong earnings reports from several leading big cap tech stocks and some better than expected economic data. After gapping higher at the open the major averages rallied for the rest of the session and all closed at their intraday trading highs, a sign that buying continued as prices rose. The action was in the big cap tech stocks after GOOGL, AMZM, MSFT, and INTC all had big beats in their earnings reports. The Nasd averages had been the laggards as the New York averages led. That changed yesterday as the COMPQ and the NDX rose 2.20% and 2.91% respectively. The SPX was higher by .81%, still a nice gain, while the DOW took a rest. This is probably positive as the DOW was starting to look parabolic and now seems to be taking a rest to let its moving averages catch up. Volume was higher across the board, which is just what you want to see on a strong rally day. Leading stocks also had a strong session with the leaders index rallying 2.14% for the day. The index closed high in its trading and tagged its 17dma, which is now resistance. The next step for the leaders index is to break above this important moving average. Volume on the index was higher and above average, a good sign. The index is still well below its recent highs and is now well over three months old. There are several components that are broken and considering the move to new highs in the major averages I may create a new index in the next few days to better represent the performance of the best canslim type stocks. I have been saying that over the last week or so the market has been struggling as we were in at least a short term consolidation. The Nasd type of stocks that had been leading were eclipsed by the New York stocks. That changed yesterday as these stocks reasserted their leadership after good earnings reports from top stocks last week. This produced fresh breakouts and early buy situations in many stocks. There will be more earnings reports in top stocks next week like FB, AAPL, and BABA. If these are as strong as last week’s reports the move higher could well continue. The market has shown a pattern of rallies followed by small consolidations or very mild pullbacks for a long time now and that pattern continues. There are some red flags out there and this bull market is very old, but barring some big earnings misses next week it looks like we are going higher in at least the short term. Jerry