Leaders Index 8-16-19

[Jerry Samet]

The market continued its news driven volatility yesterday, this time on the upside. There were reports of new stimulus programs from China and Germany. The market opened higher and after climbing for a while spent the rest of the session holding the gains. The higher prices were pretty strong and evenly distributed. The COMPQ and the NDX were up by 1.67% and 1.59% respectively. The SPX was higher by 1.44%. All the major averages closed high in their intraday trading ranges. The real problem for yesterday’s move was volume. It was lower across the board. Down 12.63% on the Nasd and 17.46% on the New York. Leading stocks had a good session as well, at least on a price basis. The leaders index was higher by 2.32% and it closed high in its trading range. The index finished high in its trading range, but the volume was lower and well below average. The market continued its wild gyrations yesterday. We got another strong price rally on a price basis based on a news story. There was even a Eureka signal yesterday, which means that two of the three confirming indicators have confirmed the latest follow through, although the most important, the weekly Coppock, has not. There are a lot of conflicting cross currents right now. The follow through and the Eureka yesterday were caused by news stories. There was a distribution day the first day after the follow through, which is almost always fatal to a follow through. We are also seeing a very negative volume pattern in this rally attempt. There are down day on high volume and rally days on lower volume. This type of volume signature is not what you see in a healthy market. The Eureka signal improves the confirmation of the follow through last week, but there are so many negatives that it is hard to believe that we will really see a tradable rally out of it. The fact that volume was lower yesterday despite the fact that it was an expiration day shows that large institutional players were not heavy buyers of stocks yesterday. The market is a crap shoot right now and could go either way based on the current headlines. It is very difficult to navigate the market right now and a good degree of caution is warranted. Jerry