Leaders Index 8-31-18

The market staged an overall positive session yesterday. There was some early strength that was cut off by news of trade problems with Canada. After the selling the market worked to recover. The Nasd averages again led the way with the COMPQ and the NDX higher by .26% and .16% respectively. The SPX was pretty much flat with a gain of only .01%. All the major averages closed in the upper half of their intraday trading ranges, a sign of support. Volume was lower across the board, which is to be expected on the Friday before a three day holiday weekend. Leading stocks were generally positive with the leaders index gaining .55% on the day. This was enough for a new high in the index on both a closing and an intraday basis. The relative strength line of the leaders index also made a new high, showing that quality growth stocks are outperforming the overall market. The index finished in the upper half of its trading range, a sign of support and volume, while lower than Thursday was still well above average. This shows buying in these stocks by large institutional players. The market continues to act well overall. Leading stocks are doing well as can be seen in the outperformance of the leaders index. Both of the short term indicators I look at, the Summation Index and the A’s minus E’s are still positive, although the Summation Index is looking a little toppy. Markets are acting well and are holding up in the face of some negative news on trade and tariffs. This is good. A market that can hold gains or even build on them in the face of negative news usually wants to go higher. Sentiment is getting a little extended as can be seen in the Investors Intelligence numbers, but it got more extreme earlier in the year. The market will likely move higher from here, but a bit of consolidation here would not be surprising. Jerry