The market opened weaker and it looked like there would be further declines. There was news of progress on debt ceiling talks and the major averages staged a positive reversal and rallied into the close. The gains were pretty evenly divided with the COMPQ and the NDX gaining .47% and .63% respectively. The SPX rallied .41%. All finished near their intraday trading highs. Volume was higher across the board. It gained 8.10% on the Nasd and 11.51% on the New York. Leading stocks were mixed. The leaders index didn’t recover all its early losses and closed with a decline of .79%, although other ETF’s of quality growth stocks were slightly higher. The index closed in about the middle of its trading range. Volume was higher and about average. The market reversed higher after news of a possible short term deal on the debt limit talks in Washington. The action today was actually pretty positive as the reversal happened on higher volume, showing that large institutional players were buyers today. The charts of the major averages and the leaders index still look pretty sickly, but we could be possibly setting up for a follow through in the next few days if the market continues to rally on volume. It would just about fit the pattern we have seen all year of quick and violent reversals that make anything but very short term trading a challenge. The weight of the evidence still points to weakness ahead, but you never know. This is a very difficult market to make any real progress in. I have always said that you should be in the market when it is easy to make money, not when it is hard. When the going gets tough the tough go to the beach. Jerry
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