Leaders Index 6-30-16

The rally after the Brexit decline continued for the third session today. All the major averages opened strong and rallied through out the day. They all closed at their intraday highs, a solid sigh of support. The COMPQ rallied 1.33% while the SPX gained 1.36%. The best part of today’s action was the volume. It was higher across the board and above average on both exchanges. This is the confirmation we have been looking for since the rally attempt began three day ago. The strong volume showed that large institutional players were clearly buying stocks today. Leading stocks had a good session as well with the leaders index gaining 2.54% on heavier and above average volume. This is also the strongest session for leading growth stocks and the index cleared it’s short term 9dma and 17dma. It is now above all it’s important moving averages and is approaching it’s old high. The relative strength line of the index is also close to it’s highs. The market has now regained the bulk of the losses after the British vote. All the major averages are back above their important moving averages on solid volume. They are close to resistance levels at recent highs and the next step is to get above those levels with some conviction. The picture certainly improved with today’s action being the best so far. IBD called a third day follow through and are now back to a rally call. Looking at the three indicators I use to confirm follow through days the score is two out of three. The %E’s are in the proper range while there have been several Eureka signals in the last few days. Only the weekly Coppock is not in a position to signal. That makes this follow through pretty well confirmed, although the weekly Coppock is the most important of the three. The market looks better right now but it has been so crazy lately that a good degree of caution is still warranted. Buys, while ok, should be made carefully. I will look at updating the leaders index over the weekend. Jerry