Leaders Index 6-24-22

It was a strange market yesterday. The major averages opened with solid gains and were strong the entire session on some dovish comments from a Fed governor. Late buying saw all the major averages close near their intraday trading highs. The gains were pretty evenly spread with the COMPQ and the NDX gaining 3.34% and 3.49% respectively. The SPX rallied 3.06%. Volume was higher across the board, mainly due to the Russell rebalancing. This was enough to qualify for the technical definition of a follow through. Leading stocks showed gains as well, but less than the overall market. The leaders index gained 1.88% and closed in the lower half of its trading range. Volume spiked just as it did on the major averages. The market opened strong, possibly on comments from a Fed governor that a recession may not happen. The major averages held these gains until a little late buying came in and the major averages closed near their highs. There was heavy volume at the open but it faded and was lower near the close. The burst of volume due to the Russell rebalancing came in near the close and that was enough to cause a follow through. This is another poorly confirmed follow through in a bear market. The weekly Coppock did not confirm and it would take a huge rally next week to get it to turn up, not likely. The %E’s were at 26.2% on the day of the follow through, much to high to confirm. There was no Eureka signal either so none of the three confirming indicators will confirm. I believe there have been four follow throughs in this bear market that have all failed quickly, I don’t think this one will be any different. At some point you would think the law of averages would kick in and produce a successful follow through, but not this one. One of the previous follow throughs was caused by a Fed announcement that the market liked, but it failed quickly. The targets for this rally attempt are the declining 50dma’s of the major averages. They are only a few percentage points from here. The major averages would have to overcome this resistance to have any chance of a successful rally. I don’t think it will happen. Jerry