It was a pretty quiet pre-holiday session yesterday. The major averages opened slightly lower and traded around unchanged most of the day. The Nasd averages were a bit stronger with the COMPQ and the NDX higher by .13% and .16% respectively. The SPX was lower by .24%. The major averages closed in about the middle of its intraday trading range and volume was lower across the board. This is to be expected on the Friday before a three day holiday weekend. Leading stocks did a bit better than the overall market with the leaders index gaining .25% on the session. The index finished in the upper half of its trading range, a positive sign. It also remained comfortably above its short term 9dma support level and it made new highs on both a closing and an intraday basis. The relative strength line of the leaders index also made a new high. The market is acting pretty well right now. The fact that quality growth stocks are leading the market higher is a good sign. There is real strength now in the semiconductor and the small cap stocks. The key now is that the major New York and Nasd averages are still below their recent all-time highs. The COMPQ is still showing a head and shoulders pattern that is building. How this is resolved will tell us a lot. For there to be a sustained rally this major averages must reach new high ground and break this pattern. If the rally fails and the COMPQ goes on to break the neck line to the downside then we will be looking at a meaningful decline. I hope everyone has a good holiday weekend. Jerry
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