The market staged a strong rally yesterday after a well-received employment report. The major averages opened higher and after a slight decline rallied into the close. All the major averages finished near their intraday trading highs. The COMPQ and the NDX gained 2.56% and 2.78% respectively. The SPX rallied 2.28%. Volume was higher across the board. This along with the price gains produced a follow through on all the major averages. Leading stocks rallied as well with the leaders index gaining 3.52% on the day. The index closed in the lower half of its trading range on higher but below average volume. The market rallied hard yesterday when the employment report came in better than expected. The slowing wage growth led market participants to again believe the Fed might slow the rate increases. The strong action produced a follow through again. This would be a poorly confirmed follow through as there was no Eureka signal yesterday. The percent E’s were only 7.5%, which is much to low to confirm a follow through. The weekly Coppock was headed higher before yesterday’s action so while it is headed higher it is not really a confirmation. That makes this a poorly confirmed follow through in a bear market with a low probably of producing a strong rally. It looks a lot like the rally on 11/30 that was of similar strength after Powell gave well received remarks. That rally didn’t produce much in the way of gains. This one might produce modest gains as the A’s minus E’s and the Summation Index both turned up earlier in the week. With that confirmation there may be some modest upside action, but I don’t think it will produce a solid rally. We are sill in a bear market and the final lows are likely not in yet. Jerry
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