Leaders Index 12-26-14

The market had a generally positive session yesterday. The major averages opened higher and were in positive territory all day. Virtually all of the major averages made new all time or multi year highs. This includes the COMPQ, which was up by .70% while the SPY gained .33%. Also making new highs were small and mid cap stocks along with semiconductors. The Nasd averages closed in the upper half of their intraday ranges while the New York averages finished in about the middle of theirs. Volume was higher than Wednesday’s half session, which would be expected, but it was still very light. We will likely not see any real volume until after the New Year’s holiday. Leading stocks were generally higher as well with the leaders index rising .57% on higher but still below average volume. It set new highs on both a price and a relative strength basis. In spite of this big winners are almost nonexistent. Very few stocks are producing strong gains and those that do move higher are doing so on a pretty limited basis. For every stock that produces even modest gains there are two or three others that fail and cause losses. Unless your stock picking is almost perfect it will be very difficult to make any meaningful gains in this environment. This is typical of very late cycle action. The major averages move higher as large institutional players increasingly move into a smaller number of large cap defensive stocks while the majority of stocks languish or go lower. This type of bifurcation was seen in the recent cluster of Hindenburg Omen signals. At this point there is probably more profit potential in index ETF’s than there is in trying to pick the rare winning stock. In either case this is a market for taking small gains if you have them and not getting to excited by all the hype in the news media about the new highs in the major averages. Jerry