Leaders Index 4-1-14

The market had another solid rally day today with the major averages posting good gains for the second day in a row. The COMPQ led the way up today with a gain of 1.64% while the SPY was ahead by .70%. Volume was higher across the board, although the gain in New York volume was only 1.84%. All the major averages again closed near their intraday highs. The COMPQ is now back above both it’s 50dma and it’s short term moving averages. The SPY went back into new high ground, but only by a small amount. Leading stocks had a good day also with the leaders index climbing 3.23% on higher but still below average volume. It also regained it’s important 50dm and closed high in it’s intraday range at the 9dma. The index looks like it is forming the right side of a cup formation. The new high in the SPY was enough to move IBD back into a rally mode, continuing the pattern of the recent past of small corrections quickly followed by rallies to new highs. The COMPQ had everything needed for a follow through except it was in the third day of a rally and not the fourth. This means that we again went into rally mode based on a return of a major average to new high ground and not a follow through. These rallies are less reliable. I will be looking at updating the index or creating a new one in the next day or two to reflect this. The action of the market in the last couple of days has been good but the %E’s are 7.1%, a low level for the start of a rally. This would seem to make a strong rally less likely. Although there are not a large number of buyable stocks right now, it is ok to take some positions, but probably not a good idea to get to aggressive. Jerry