Leaders Index 5-23-14

The market had another solid up day on a price basis yesterday. The markets opened higher and climbed the rest of the day. The major averages closed the session at their intraday highs, a sign of strength. Volume remains the key. It was lower yesterday as you would expect on the Friday before a holiday weekend, but volume has been absent for more than a week as the major averages have rallied on a price basis. Leading stocks had a good session also with the leaders index rising 1.25% on higher but slightly below average volume. We have seen a rise in the index in the last week and a half and it may be forming the right side of a cup. The problem is that with five of the last six sessions being higher, there has not been a single day of above average volume. The index is back above it’s 9dma and it’s 17dma and is just below it’s 50dma. Getting above the 50 would be very positive. The picture has improved in the last couple of days. The SPY closed at 1900 for the first time and is within fractions of a new high that would trigger a technical rally resumption. The COMPQ rose further above it’s 50dma and may be forming the right side of a cup. The RUT got back above it’s 200dma in yesterday’s action. What we really need are more rally days with strong volume to back it up. We are close to a rally resumption caused by a move into new high ground by the SPY, but it would be much better to get a new rally from a follow through day that would wipe away distribution days. The three indicators that we use to confirm a follow through are well set up. The weekly Coppock is in negative territory and is starting to curl. The %E is at 10.1%, well within the acceptable range while a Eureka signal can come on any strong rally day. It is still a risky market, but the picture has improved. Jerry