Leaders Index 1-26-15

The market started off weaker today on news of the Greek elections yesterday. After modest early losses it reversed higher and rallied for the rest of the session, finishing with small gains. The fact that the U.S. markets, along with the European markets could shrug off this news is positive. The major averages closed near their intraday highs on mixed volume, higher on the Nasd and slightly lower on the New York. The major averages regained their 50dma’s on Thursday after the ECB announcement of a bigger QE program than was expected. Leading stocks rallied as well with the leaders index gaining .88% on lower volume than Friday. The index went into new high ground today on both a price and a relative strength basis, and there are some stocks that are showing gains after breakouts, but the gains are modest and the number is still relatively small. For every stock that is showing modest gains more are going nowhere. We are not seeing the both the number and the magnitude of gains that are associated with strong rallies. In addition the index has rallied three day in a row on lower volume. If this continues the index will take on a wedging look. Many times in the recent past the market has turned around after a pullback and rallied only to see the rally attempt fail. This attempt still has a lot to prove. For now I guess it is ok to participate in this market but positions should be smaller than normal and expectations modest. Even small gains should be taken fairly quickly as they are not likely to turn into large gains. Jerry