Leaders Index 1-22-16

We had a nice rally day yesterday. This is the first solid looking up day in quite a while. The market opened strongly higher and held it’s gains for the rest of the session. The COMPQ gained 2.66% on the day while the SPX rallied 2.03%. All the major averages closed at or near their intraday highs, showing there was little selling into the rally. The only real problem with the day’s action was that volume was lower across the board. This shows that large institutional players were not heavy buyers yesterday as they were heavy sellers in recent declines. Leading stocks had a good day as well with the leaders index gaining 2.19% on the day. Volume on the index was slightly lower than yesterday, mirroring the overall market. The index broke above it’s short term 9dma, which was the first hurdle for a possible recovery in the index. It now has it’s declining 17dma, which just broke below the 50dma, and then the 50dma to overcome. After the reversal we had on Wednesday I said we could have at least a short term rally, and it looks like we will get that. The question is how far will it go. We will be in a position next week to get a follow through if yesterday’s strength continues, but it is questionable if it will amount to much. We will have to look at the three confirming indicators if it comes, but most follow throughs in bear markets don’t work. There could always be a tradable rally, but the odds of significant gains are slim. Jerry