Leaders Index 9-5-14

The market opened lower yesterday, mostly on the weaker than expected employment report. It looked like there could be another ugly day after two weak days in a row. If this happened the rally could get into trouble. After bottoming a little more than an hour into the trading session things reversed and the major averages rallied for the rest of the day. Late strength allowed all the major averages to finish at the highs of the session and above their short term 10dma’s. This is in contrast to the last two sessions where the market closed weak. Volume was lower across the board, showing little big player buying on the rally day was weak. Leading stocks performed about the same as the overall market. Early weakness took the leaders index below it’s important 17dma, but the late rally took it above this level and allowed the index to finish near it’s highs. It was not enough however to get it back above it’s short term 9dma. The index rose .57% on the day on higher and above average volume. This shows that there was some institutional buying in quality growth stocks. Despite this big winners in the rally have been few. This is typical of late cycle rallies as they are hard to make much progress in. In contrast early cycle rallies produce large numbers of big winners. The market continues to work it’s way higher, but caution should be exercised in this market. For every small winner there are several losers. Big gainers that can offset several small losers are hard to come by. A couple of worrisome items appeared this week. The A’s minus E’s turned slightly lower on Friday, but the small decline could be reversed by gains next week. Also the weekly Coppock on the COMPQ has turned down after a long advance. These are not reasons to sell everything, but staying close to the exits is a good idea. Jerry