Leaders Index 2-1-19

The market put in a pretty quiet session yesterday. The was not much change in the major averages although the Nasd averages were weakest as a poorly received earnings report from AMZN dragged the big cap tech stocks down. The COMPQ and the NDX declined .25% and .45% respectively. The SPX was higher by .09%. The Nasd averages closed in the lower half of their intraday trading ranges while the New York averages finished in about the middle of their trading ranges. Volume was lower across the board, just what you want to see in a weak to unchanged market. Leading stocks outperformed the overall market with the leaders index gaining .73% and closing in the upper half of its trading range. This is a new high for the leaders index on both a closing and an intraday basis. Volume was higher and above average. The market put in an overall encouraging session yesterday. The weak earnings report from such an important stock a AMZN could have caused serious selling, but it didn’t. The declines in the Nasd averages were small and the New York averages were higher. The INDU remains above its 200dma. The fact that quality growth stocks are outperforming the market is another positive. The leaders index made new highs on higher and above average volume. The relative strength line of the index also made a new high. The market rarely gets into much trouble when quality growth stocks are acting well. The low volume yesterday also shows that large institutional players were not selling stocks heavily, including large cap tech stocks. We are also seeing more breakouts, which is good. The market is currently consolidating in a constructive manner and the next target is the 200dma’s of the major averages. If they overcome this resistance, particularly with strong volume, a run to the old highs is likely in the cards. If they can’t the rally doesn’t have much farther to go. Jerry