The market put in an encouraging session today. The major averages opened higher and rallied most of the session. A market friendly Fed announcement gave a little fuel to the rally and all the major averages finished high in their intraday trading ranges, a sign of support. The gains were pretty evenly divided with the COMPQ and the NDX gaining 1.35% and 1.24% respectively. The SPX rallied 1.24%. The small and mid-cap stocks, along with the semiconductor stocks, did even better. Volume was higher across the board. It gained 15.25% on the New York and 2.51% on the Nasd. This is positive as it shows that large institutional players were buying stocks today. Leading stocks had a good day as well. The leaders index rallied 2.29% on the day. It closed high in its trading range and is holding above the now converging 9dma and 17dma. Volume was lower and well below average. The action of the market today was overall positive. The major averages rallied throughout the session and closed strong. This was accompanied by higher volume, which that large institutional players were buyers today. That is always good. We appear to be in a trading range right now in both the major averages and quality growth stocks. After a nice tight rally since the rally began back in early April the leaders index appears to be forming a pretty nice flat base. It is a few days short. It is normal for leading stocks to rally and then consolidate and form a new base. The leaders index appears to be doing that in a fairly constructive manner. The Nasd averages are also in a consolidation along with a shorter one in the SPX. To really signal that the market is heading higher we should see the major averages break above their recent highs and the leaders index break out of its current base. That would likely signal that the rally is resuming. If it doesn’t happen and the major averages and the leaders index break down then the rally will be in some trouble. Jerry
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