10-14-11 Comments

I usually pick an index as a leading index, where it goes I expect the broad market to follow. Today I am looking at two indices: $NDX (Nasdaq 100) and $NYA (NYSE Composite) in addition to Jerry's Leaders Index. Arguably the Nasdaq 100 may be too narrow. The $NYA was the index used to declare the follow-through day and is a broad index, perhaps full of laggards. A laggard index may be okay to monitor in a junk-off-the-bottom rally however. The distinguishing characteristics of these two indices are that the $NDX has risen above the 200-day moving average and the $NYA rose above the 50-day later than the NASDAQ, S&P and Dow Jones. Thus we have a view of something leading and the laggards. We may be on the way to the 200-day moving average on most broad indices, this would be consistent with very many bear-market periods after the first leg down. There are a lot of short sale setups but in my opinion this is not the time to lean to the short side. I am watching for the three indices mentioned to lead the way, meaning stall out and fail at the 50 or 200 day. In the mean time I am long SBH and DLTR.