Leaders Index 5-17-22

The market staged a strong rally today. After opening with good gains there were a couple of weak periods during the day but the market came back. Late strength saw all the major averages finish near their intraday trading highs. The gains were strong with the COMPQ and the NDX rallying 2.76% and 2.62% respectively. The SPX was 2.02% higher. Volume was higher across the board. It gained 2.89% on the Nasd and 9.84% on the New York. Leading stocks had a good session as well with the leaders index gaining 2.56% on the day. The index closed high in its trading range on volume that was about unchanged. The index tagged its 50dma today but closed below it. The RS line of the leaders index made a new high today. The action of the market today qualified as a follow through. There were strong gains on higher volume. There was good economic news today before the open that may have reduced the worry about a recession and Powell had some generally positive comments. Whatever the reason the action today was positive. The market looked in the last couple of days like it wanted to rally and today’s action makes it look like a counter trend rally is under way. This would lend strength to the argument that the second leg of the bear market has been completed. Right now it looks unlikely that the weekly Coppock will confirm and the %E’s are at 25.5%, to high to confirm. There was a Eureka signal on Friday and likely another today, so that one will confirm. Overall this is a poorly confirmed follow through in a bear market so the odds do not favor it becoming a really successful rally that could produce sizable gains. Anything can happen and poorly confirmed follow through days do sometimes work, but the odds are against you so caution is warranted. Jerry