Leaders Index 6-28-16

We finally got a bounce today after the selling of the last two days. We had a solid rally session today, at least on a price basis. The market opened higher and rallied through most of the session. Late strength allowed all the major averages to close at their intraday trading highs, a positive event. The COMPQ rose 2.12% while the SPX regained it’s 200dma with a gain of 1.78%. The market was overdue for a bounce and we got it today. The quality of the bounce after a decline tells you a lot about the health of the market. What we were missing today was volume. It was a lot lower than yesterday and especially Friday. It was slightly above average on the Nasd and about average on the New York. Leading stocks were higher as well with the leaders index gaining 2.35% and closing high in it’s intraday trading range. The index regained it’s 50dma by a hair, and it must continue to rally above this important moving average. If it falls back below it then further weakness is likely ahead. Volume on the leaders index mirrored the overall market. It was lower than the declining days, although it was a bit above average. The chart of the index still looks pretty ugly. The rally today lacked the kind of volume we saw on the way down. A low volume bounce following a high volume sell off is a sign of a lack of strength. Large institutional players were not that active today. One day is not enough to judge a rally attempt, but today’s action was not that impressive. We need more days like this on heavy volume and a retaking of moving averages that are now resistance to improve the picture. Jerry