Leaders Index 10-21-22

The market staged a strong rally yesterday, and unlike previous rallies earlier in the week this one stuck. The major averages opened higher and quickly gave back early gains. New buying came in and the major averages rallied into the close, finishing near their intraday trading highs. The COMPQ and the NDX gained 2.31% and 2.39% respectively. The SPX was higher by 2.37%. Volume was mixed. It was higher by 11.31% on the New York and lower by 1.62% on the Nasd, according to ToS. Leading stocks were higher as well with the leaders index gaining 2.32% on the day. The index closed near the top of its trading range on higher and above average volume. The market showed early strength yesterday but it quickly faded, like it did earlier in the week. Then a news story came out about a Fed insider saying that the Fed might ease up on rate increases and market participants again jumped in with both feet. The major averages showed strong price gains on higher volume on the New York. This was enough to produce a follow through on the New York averages. Yesterday was also an expiration day which juiced up the volume, but it still qualifies. Overall this would have to be a poorly confirmed follow through. There was a Eureka signal on Monday so that was close enough. The %E’s were just above the limit so that didn’t confirm. The weekly Coppock is likely two weeks away from turning up so that indicator did not confirm as of now. The expiration day caused higher volume on the Nasd and produced the follow through, but I think this one should be treated carefully. I did some work yesterday on creating a new leaders index but I am having trouble coming up with enough names without filling it up with to many energy stocks. I will work on it some more this weekend. The 50dma’s of the major averages loom just above current levels and that will be significant resistance. If the major averages can overcome these moving averages the picture would improve. I would say this is likely to be another failed follow through in a bear market, but you can never be sure. Treat this one with a good degree of caution. Jerry