What a difference a couple of days can make. Monday and Tuesday were very negative days and it looked like the market might sell off. In the next two days that changed. Yesterday the market rallied on news that Evergrande would make its debt payments and a friendly Fed announcement. That continued today as the major averages opened higher and mostly held the gains for the rest of the session. All the major averages finished high in their intraday trading ranges. The COMPQ and the NDX gained 1.04% and .92% respectively. The SPX rallied 1.21%. Volume was lower across the board. It fell only .83% on the Nasd and 11.70% on the New York. You would prefer to see higher volume as prices advance. Leading stocks had another strong session with the leaders index gaining 2.22% on the day, after rallying 1.29% yesterday. The index closed high in its trading range on lower volume. This was a new closing but not intraday high today. The relative strength line of the leaders index also made a new high. The market has shown again how difficult it has been much of this year. After some real weakness over about a week IBD went to market under pressure as it has several times this year. As also has happened several times this year the market quickly recovered. They went back to confirmed uptrend today after two days. The major averages acted strong in the last two days and the fact that quality growth stocks are again outperforming are encouraging. It seems that it is really difficult to get a real correction when so much money is being pumped into the system, talk of tapering notwithstanding. Right now it looks like it is going to be difficult to get a real correction. One thing that is interesting now is that the rally has been getting very narrow as about half of all stocks are below their 50dma’s. We have also seen recently many of the stocks that have been the real leaders ae starting to go vertical and a good number into climax runs. The last time I saw this type of action was the last 1999 into early 2000 period. It is impossible to know how far this rally will go before it ends, but some of the things you see at important tops are beginning to show up. Calling tops is impossible now as we are in a pretty unique situation, but we should remember where we are in the cycle. Jerry
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