After a sell off the quality of the bounce is critical. You want to see a strong rebound on volume to indicate that the worst is over. We didn’t get that today. The market opened higher and rallied for a while before a late sell off. The Nasd averages were the strongest with the COMPQ and the NDX higher by .39% and .43% respectively. The SPX rallied by .22%. All the major averages finished low in their intraday trading ranges, not a sign of strength. Volume was lower across the board. Leading stocks bounced as well, but also without much vigor. The leaders index was higher by 1.33% and closed in the upper half of its trading range. The index tagged its 17dma now resistance level but closed below it. Volume was much lower and almost nonexistent. As I said the quality of the bounce is critical. Today’s bounce left a lot to be desired. The gains were much smaller than the losses yesterday, volume on the bounce was lower and the major averages closed low in their trading ranges. The leaders index needs to break above its 17dma with conviction and the major averages should rally with volume behind the price gains. If this doesn’t happen the odds favor lower prices ahead. Jerry
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