The market staged a good rally today in a continuation of the strength of the last couple of days. The major averages opened mostly higher and then rallied most of the session. All the major averages finished high in their intraday trading ranges. The Nasd averages were the strongest with the COMPQ and the NDX gaining 2.68% and 2.79% respectively. The SPX rallied 1.99%. Volume was mixed. It gained 3.74% on the Nasd and declined 2.10% on the New York. The higher Nasd volume combined with the higher volume was enough for a follow through on the Nasd averages. Leading stocks were higher as well with the leaders index gaining .92% on the day. The index closed low in its trading range on lower volume. At its high the index broke above its 50dma, but couldn’t close there. The action of the market today was strong. The price gains were high on all the major averages and the higher volume on the Nasd produced a new follow through day. This one looks to be poorly confirmed as the %E’s were to high and there was no Eureka signal today. The weekly Coppock doesn’t look like it will confirm either, but a strong rally from here quickly could change that in the next week or so. As I have said recently most follow through days in bear market’s fail. The last one failed in one day. I think this one has a chance to do a little better. There has been a lot of accumulation under the surface in the last couple of days and some of the short term indicators I follow are showing strength. I don’t think this follow through will reach the level of a successful follow through, which we define as a 10% move in at least five weeks from the date of the follow through. We could get a counter trend rally here that would take the major averages up to or near their 50dma’s. That would likely be the end of the second leg of this bear market. A move to the 50dma’s would set up the third and hopefully last leg of the bear market that would lead to the ultimate bottom of this bear. There will be no update tomorrow. I hope everyone has a good holiday weekend. Jerry
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