Leaders Index 4-8-20

The market staged a strong rally today, at least on a price basis. The major averages opened higher and after a little selling rallied for most of the remainder of the session. All the major averages finished at or very near their intraday trading highs as there was buying into the close. The Nasd averages were a little weaker with the COMPQ and the NDX rallying 2.58% and 2.14% respectively. The SPX was higher by 3.41%. Volume was a key issue as it was lower across the board. It declined 16.82% on the New York and 14.36% on the Nasd. Leading stocks were higher as well. Since there were follow through days on both the SPX and the COMPQ I decided to create a new leaders index. It was more difficult to find enough stocks as would be expected with the recent decline. The new index contains 20 stocks in 15 different industry groups and is a good cross section of the stocks that have done best recently. The index gained 2.09% today and closed in the upper half of its trading range. Volume was lower and well below average. I have included a text file with the components of the new index. The market rallied today on more indications that the spread of the virus and new deaths may be leveling off. There was also a report that Russia might be ready to make a deal on oil production. That may have been the reason for the outperformance of the New York averages as they have more energy stocks listed there. The only negative today was the low volume. This shows that large institutional players were not buying stocks heavily today. You want to see higher volume on rally days. The market appears to be trying to rally but is having trouble. There are a lot of negatives out there but the government is shoveling out so much money that is has to go somewhere, and a lot of it is going into the stock market. The weekly Coppock is seeing the rate of decline slowing in the last week. Monday should tell us if this indicator is likely to turn. If it does it will be very positive. It’s hard to know where things will go now as there are pluses and minuses out there and there are still few attractive stocks. The market could go either way from here so while some positions can be taken caution is also warranted. Jerry