The market staged a solid rally yesterday. The major averages gapped higher on the open, mostly on increased optimism about a China trade deal. There was strength all around with the COMPQ and the NDX higher by .78% and .80% respectively. The SPX rallied .67%. The major averages held the early gains and built on them during the session. All the major averages closed at or very near the top of their intraday trading ranges, a sign of support. Volume was higher across the board, showing that large institutional players were buying stocks yesterday. Leading stocks rallied as well with the leaders index gaining 1.30% on the session. The index closed high in its trading range and cleared the short term 9dma. The index is now above all its short term moving averages. Volume was higher but below average. This shows that there was buying in quality growth stocks as well as the major averages. The market closed the month and the first quarter on a strong note. The gains yesterday were solid and stronger volume confirmed the action. The 50dma’s on the major averages are very close to breaking above their 200dma’s in what would be a golden cross for the major averages. This would be positive. The market does seem to be struggling a bit as it is having trouble getting back to its old highs. Recent breakouts have not been producing strong gains and the breakout tracker shows that the best gains came in stocks that broke out in the first four weeks after the follow through. The breakouts on average since then have not produced worthwhile gains. If the rally is to go much farther the major averages must overcome the all-time highs they made later last year. If they fail before they get to this level then the rally we are experiencing is a strong counter trend rally in a bear market. If the major averages break above the old highs then the selloff we saw late last year was a major correction in an ongoing bull market. We will have to wait and let the market tell us which it will be. Jerry
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