Leaders Index 5-21-18

After mostly flat action last week the market staged a rally today on news of easing trade tension with China. The major averages opened strong after futures reacted to the news. There was then a bit of a divergence. The New York averages held most of their gains and closed in the upper half of their intraday trading ranges. The Nasd averages didn’t do as well and finished in the lower half of their trading ranges. The COMPQ achieved a gain of .54% while the SPX rallied .74%. Volume was lower across the board and well below average. You would prefer to see stronger volume on a rally day. After a big rally into new high ground last week the small caps continued to advance with the RUT higher by .66%. Leading stocks underperformed the overall market today with the leaders index higher by only .13% on the session. After strong action last week this was still enough for new highs on both a closing and an intraday basis. The index also showed strength by closing near its highs of the day and above all its short term moving averages. Volume was lower on the day, mirroring the overall market. The action of the market and leading stocks right now is generally positive. After an advance the major averages spent most of last week consolidating those gains. The exception was the small caps as the RUT made a series of new highs and continued to do so today. The outperformance of both small caps and quality growth stocks is a positive for the market. The major averages remain below their all-time highs and for this rally to continue they must resolve this divergence by overcoming past highs. If they don’t the current leaders will likely roll over. Another item to consider is that the weekly Coppock has now given a buy signal on all the major averages. It turned up a week ago Friday but that week’s gain was too small to constitute a signal. The continued small advance last week confirmed the signal. The fact that this important indicator has signaled is important for the market and increases the chances that this will prove to be a tradable rally. We won’t have this week’s number until Friday, but it would be good to see a solid move higher. Quality growth stocks are acting better than the overall market, which is a good sign and some stocks are acting well after passing buy points. It looks like the market wants to go higher and there is money to be made on the long side right now. Jerry