Leaders Index 1-2-26

After lackluster action to end the year the market had a mixed session yesterday. There was weakness in in some tech sectors, but overall it was a moderately positive session. The major averages opened with solid gains and mostly lost them by the end of the day. All the major averages finished in the lower half of their intraday trading ranges. The COMPQ and the NDX fell .03% and .17% respectively. The SPX gained .19%. Volume was higher across the board, but that was compared to a half day on Wednesday. Leading stocks had a good session. The leaders index gained 2.77% on the day. The index closed high in its trading range on higher but slightly below average volume. The market had an overall mildly positive session yesterday. There was some weakness in tech stocks which held back the NASD, but other parts of the market did alright. Market internals were strong and leading stocks did well. The action of the market overall was ok yesterday, but recent action has not been that good. The major averages have been pretty much flat for the last two months. The Santa Claus rally never materialized and leading stocks haven’t acted very well lately. The leaders index has mirrored the major averages in recent action. The market must put in some positive action in the early part of January or the rally will be in trouble.
The market had an overall positive year last year, but it was pretty volatile. We had a short V bottom bear market after the tariff announcements and the COMPQ declined more than 20%, but the SPX stopped just short of this level. V bottom bears are rare and are caused by outside events. In 1998 the Asian contagion and the Russian default caused a V bottom bear. The Covid pandemic caused another one in 2020. These bears tend to be short and sharp and recover quickly. They are short so they don’t produce the monthly Coppock buy signals that more standard and frequent three leg bears produce. The bull markets that follow tend to be shorter than the bulls that follow the more standard bear markets. That would indicate that the bull is not likely to last for the full year of 2026. We have had three very good years in a row, despite the short bear we had earlier in the year. I suspect that this year will see some more difficult action. The current rally is looking a little shaky, and we must see positive action quickly for it to continue. Jerry