The market staged a positive reversal today. After opening with large losses after China announced tariffs on U S imports the major averages put in a bottom in the first five minutes of trading and rallied from there. The advance accelerated after Kudlow said that there would be no trade war. The COMPQ led the way with a gain of 1.45% while the SPX rallied 1.16%. Both closed near their intraday trading highs, a sign of strength. Volume was again an issue, it was lower across the board. Leading stocks had a good day with a wide trading range as they gained 1.85% on the session . The index made a new low for the move early then reversed higher to regain the 50dma and close above it. It finished near the top of its trading range and right at its declining 9dma. Volume mirrored the overall market as it was lower than yesterday and below average. The kind of positive reversal we saw today can lead to something of a rally. We are seeing pretty extreme volatility right now so it is difficult to make progress in either direction. The real problem today was again volume. We had a solid positive reversal, but it came on lower volume. You want to see strong volume on a day like this. The pattern of high volume declines and lower volume rallies continues. The major averages could well now make a run for their declining 50 day moving averages. And the leaders index next target is its 17dma. How they react at these resistance levels will tell us a lot. The action of the market today was generally good, but a lot more is needed before the picture really improves. Jerry
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