The market put in a disappointing session yesterday. After a big selloff you want to see the quality of the bounce. Yesterday’s was underwhelming. The major averages opened strong, but made their highs in the first fifteen minutes of trading. After that it was mostly lower for the rest of the session. There was a little late buying so the major averages finished off their lows. The New York averages were a bit stronger with the SPX gaining 1.31%. The COMPQ and the NDX were higher by 1.01% and .79% respectively. The Nasd averages finished just below the midpoint of their intraday trading ranges while the New York averages closed just above theirs. Volume was lower across the board. It fell 18.10% on the New York and 17.55% on the Nasd. The fact that there was lower volume on the bounce than on the sell off is not encouraging. Leading stocks were higher as well, but underperformed the overall market. The leaders index gained .94% on the day. It closed high in its trading range and held above its 17dma support level. Volume was lower and below average. The action of the market yesterday as not encouraging. After a big decline the quality of the bounce is important. The bounce yesterday left a lot to be desired. The market opened strong, but couldn’t hold the gains. They spent the rest of the day working their way lower. Volume was also a disappointment. You want to see higher volume on the rebound than on the sell off. That didn’t happen either. There are a lot of warning signs out there right now and a good deal of caution is warranted. If the market can’t rally with volume behind it quickly we may have seen the highs of the rally. Jerry
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