Leaders Index 2-13-18

The market started off lower today, but it didn’t last. After making their lows in the first ten minutes the major averages spent the rest of the session working their way higher. All the major averages closed at their intraday trading highs. The COMPQ was higher by .45% while the SPX rose .26%. Volume was lower across the board. Leading stocks were higher as well with the leaders index rallying 1.21% on the day. The index closed high in its intraday trading range and is just below its declining 9dma. This is the first of the short term moving averages that the leaders index will have to overcome. Volume today was lower than yesterday and below average. This is the first day of below average volume we have seen in the leaders index in almost a month. The market continued its bounce that began with Friday’s reversal. All the major averages and the leaders index closed at or near their intraday trading highs, a good sign. One problem out there is that the two rally days we have seen since the reversal day have come on successively lower volume. It seems that there was more punch in the declines than there have been in the rally’s. If this keeps up than the charts of the major averages and the leaders index will take on a wedging look. There are two things to look for right now before the confidence level can rise enough to justify new buys. The major averages should break above their 50dma’s with some conviction and strong volume. The second thing to look out for now is a follow through. Tomorrow is the fourth day of a rally attempt so it is the first day when there can be a legitimate follow through day. That would also give some go ahead to take new positions. One thing to keep in the back of your mind is that the extreme volatility we have been seeing lately could produce a follow through that could then not work. Tomorrow the CPI comes out and that should set the tone for trading. Jerry