The market opened lower yesterday and it looked like there was going to be a down session. A late rally began with about a half hour left in trading and all the major averages finished in positive territory. The COMPQ was higher by .17% while the SPX rallied .15%. All the major averages closed at their intraday trading highs, a sign that there were buyers at lower prices. Volume was mixed. It was lower on the Nasd, but IBD also said it was lower on the New York while Esignal showed it higher. Either way there was no distribution in yesterday’s action. Leading stocks underperformed the overall market as many were again lower. The leaders index was lower by .58%, although it recovered some early losses and closed in the upper half of its trading range. Volume was lower than Thursday, which is good because you want to see declines on lower volume. The index remains below its short term 9dma and 17dma and even tagged its 50dma during the session. This is the first time it has hit this important support level since the middle of November. Individual components of the index continue to get hit as much of yesterday’s decline was caused by CYBE as it fell 6.18% on very high volume. The relative strength line of the index also broke below its 50dma. The major averages are acting well and their charts look solid. Leading stocks are another matter. The last two days have seen a broad cross section of quality growth stocks showing real damage as they break important support on heavy volume. If it were just a few it would matter less, but the weakness it pretty widespread. If leading stocks can’t right themselves the advance that began with the election may well be in trouble. Jerry
Reply With Quote