Leaders Index 1-22-21

The market opened lower yesterday amid some early selling. A good chunk of those gains were later recouped, particularly In the Nasd averages. The New York averages ended with losses as the SPX declined .30% on the day. The Nasd averages were mixed with the COMPQ rallying back to a slight .09% gain. The NDX fell .29%. The greatest strength was in the small caps with the RUT rallying 1.28%. Closing prices were mixed. The COMPQ finished high in its trading range while the NDX closed in about the middle of its intraday trading range. The SPX closed high in its range also. Volume was mixed. It fell 17.59% on the Nasd and rose 13.87% on the New York. The increased volume on the New York combined with the price decline produced a new distribution day on the SPX. Leading stocks had a solid session with the leaders index gaining 2.32% on the day. The index closed near the top of its trading range and volume increased quite a bit, but was still below average. There was a fresh distribution day yesterday on the SPX, but overall the session was not to bad. Early losses were mostly recovered and the major averages finished in the middle or upper half of their trading ranges. Volume increased quite a bit on the Nasd and that is good as it was the best performing of the major averages. Small cap stocks continued to be the leaders as can be seen in the large gains in the RUT. Leading stocks continue to outperform as the leaders index had a strong gain on higher volume. The index broke above its recent consolidation and moved into new high ground on both a closing and an intraday basis. The relative strength line of the leaders index also made a new high. I have been saying for a while that there are a lot of red flags out there and that the market was looking a lot like 1999. The outperformance in leading stocks suggests that the rally is not done yet as the market usually doesn’t get into real trouble when quality growth stocks are outperforming the overall market. Things are stretched right now, but I don’t think we have seen the absolute high yet. Jerry