Leaders Index 2-7-14

The market had it’s first real positive action on Friday. The major averages opened higher after a fairly disappointing employment report and rallied for the rest of the session to finish at their intraday highs. The COMPQ lead the way with a gain of 1.7% while the SPY was higher by 1.3%. Volume was mixed, slightly lower on the New York and higher on the Nasd. This was the first really positive price volume action on the Nasd that we have seen in a long time. The COMPQ had a strong gain on higher volume for the first time since the market got into trouble last month. The volume on the New York was only about one and a half percent lower than on Thursday. The COMPQ also regained it’s important 50dma with volume, which is a positive development. The New York averages finished not far below their 50dma’s. Leading stocks had a good day as well with the leaders index rising 2.03% on higher and about average volume. This index also regained it’s 50dma on increasing volume. We are in a very difficult environment right now where it is tough to make any progress on either the long or short side of the market. The pattern of small declines followed by rallies to new highs we have seen for the last year may or may not continue. The current pullback went further than recent ones with the major averages down almost six percent from their highs, but held well above the eight percent level that contains the majority of corrections. I don’t know which way the market will go at this point. It could move higher and reinstate the rally with either a move to new highs or a follow through day or sell off and continue into an intermediate term correction, or worse. The action in the next week or two will likely tell us. Jerry