The market staged another impressive rally session today, at least on a price basis. The major averages opened higher and rallied for pretty much the entire session. The greatest strength was in the Nasd averages and semiconductor stocks. The COMPQ and the NDX were higher by 1.75% and 1.47% respectively. The SOX was higher by an impressive 4.64%, but it has been the weakest of the secondary averages lately. The SPX gained1.06%. All the major averages finished the day at their intraday trading highs as buying continued into the close. This is encouraging. The real problem was volume. It came in lower across the board. There could have been a third day follow through if there was higher volume, but it didn’t happen. Leading stocks were higher as well with the leaders index gaining 2.17% on the day. The index closed high in its trading range and volume was higher and well above average, showing there was buying in quality growth stocks. The market was set up for a rare third day follow through today and it looked early on like it would happen. Volume faded and ended up finishing lower on both exchanges. Since I expected a follow through today I created a new leaders index. It contains 21 stocks in 18 different industry groups. I have included a text file with the components of the new index and will publish both for a week or so for comparison. It is lighter on tech related stocks than usual but has shown a lot of strength lately. It was higher by 2.85% today on lower but above average volume. It is pointing almost straight up, as is its relative strength line, just what you want in a new leaders index. The major averages have had three strong up days in a row and are getting near their 200dma’s. We will have to see if this rally attempt can continue and there is going to be a follow through that includes attractive stocks in proper buy points. Right now there are few. I had a pretty hard time putting together the new leaders index, which is usually a negative sign. AAPL reported after the close and the stocks is selling off after hours. The next few days of trading should tell us a lot. Jerry
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