Leaders Index 6-7-19

The market finished with another solid up session yesterday. The major averages opened higher and rallied for about an hour and a half. The market then spent the rest of the day holding on to its gains. The major averages all closed high in their intraday trading ranges, a good sign. The Nasd averages led the way with the COMPQ and the NDX gaining 1.66% and 1.94% respectively. The SPX rallied 1.05%. Volume was mixed. It was higher by 2.70% on the Nasd and lower by 4.05% on the New York. This was enough to produce a follow through on the Nasd averages. Leading stocks had a good session as well. Due to the new follow through I have created a new leaders index. It contains 21 stocks in 16 different industry groups. The new index rallied 2.77% yesterday on much higher and well above average volume. It is also at new highs on both a closing and an intraday basis. When we have a follow through we look to the three confirming indicators to give us some clue as to how likely it is to be successful. In this case two out of three confirmed. There was a Eureka signal last Tuesday so that indicator confirmed. The %E’s are at 12% so they confirm also. The weekly Coppock is not in a position to signal so it does not confirm. The Coppock is the most important of the three and I would feel better if it confirmed also, but the other two confirming isn’t bad. It suggests that there is likely a better than even chance that this follow through will produce a tradable rally, but nothing is guaranteed. The trade deal with Mexico may help on Monday, but much of it may already be factored into the market. Much of last week’s action was caused by the market pricing in some rate cuts by the Fed later this year. It looks like much of the potential good news is priced into the market already so news that contradicts it may cause selling. I have included the chart of the last leaders index for comparison purposes and will do so for the next few days. I have also included a text file with the components of the new index. We will have to see how the market trades next week and if last week’s rally can be built on. For now we have a legitimate follow through and there are some attractive stocks out there so taking some positions is warranted. Jerry