The market opened lower today, mostly on weak economic news and it continued lower until there were solid losses. About an hour into trading the major averages found a bottom and began rallying. They rallied into the close and all the major averages finished near the top of their intraday trading ranges. The most early damage was in the Nasd averages as growth stocks were weak. The COMPQ finished lower by .20% and the NDX regained its early losses and closed with a small gain of .03%. The New York averages did better with the SPX higher by .26%. The New York averages made new highs. Volume was mixed. It was higher by 11.58% on the New York and lower by 3.19% on the Nasd. Leading stocks had another tough day with the rotation out of growth stocks continuing. The leaders index declined by 1.60% on the day. The index closed in the upper half of its trading range, but it fell further below its 17dma and even hit its 50dma during the session. Volume was higher, showing some distribution in quality growth stocks. The market put in a nice reversal of early negative action and closed strong. The New York averages made new highs and the Nasd averages recovered most of their early losses. This is encouraging. The real concern here is the weakness in leading stocks. There has been a rotation out of these stocks in recent days and that is concerning. When leading stocks are outperforming it is good for the market. When they are lagging it is a concern. Other ETF’s of leading stocks, like the FFTY and AARK, have also been weak recently. There has been a lot of rotation back and forth in recent weeks and months so it is possible these stocks could always come back into favor quickly. Continued weakness here would be a big cause for concern, but for right now the market doesn’t look like it is ready to roll over. Jerry
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