The market had a strong rally day today. After a higher open the major averages rallied all day and closed at the highs of the session. The SPY led the way with a gain of 1.11% while the COMPQ was close behind at 1.03%. Volume was higher across the board and was about average. This is another accumulation day and all the major averages are back above their 50dma’s and close to their recent highs. Yellin’s testimony seems to have given the market new life. It seems that the 6.5% trigger in the unemployment rate that the Fed said would trigger a change in monetary policy is no longer valid. That combined with an apparent deal on the debt celling helped the market. The percentage gains were just shy of what we need for a classic follow through, but it sure felt like one. IBD went back to market in rally. Leading stocks also had a good day and since the market seems to have shrugged off another mild correction I thought that a new leaders index would be appropriate. The new index contains 21 stocks in 17 different industry groups. It gained 2.32% on higher and about average volume. It is a good cross section of quality stocks and should serve as a good index. I have to say though that it was harder to put this index together than most past ones, which is generally not a good sign. It appears that once again the market will have a short sharp sell off only to be followed by a resumption of the rally. If we consider this a follow through day we have to look at the three confirming indicators. The weekly Coppock is not in a position to signal, The %E’s are 12.26%, well within the range. The Eureka indicator was right on the line. A .63 on the TRIN is required and it came in at .64. I would say that two of the three indicators confirmed. Jerry
