Jerry Samet
12-06-2018, 07:24 PM
It was a crazy ride today. The market opened sharply lower in a continuation of Tuesday’s selling. The major averages sold off hard for a couple of hours until they found a bottom. Word that the Fed would likely hold off on some rate increases next year sparked a rally that ran into the close. The Nasd averages did better and even got into positive territory. The COMPQ and the NDX were higher by .42% and .64% respectively. The SPX lost .15%. All the major averages finished at their intraday trading highs as buying came in after news of the Fed’s intentions. Volume was higher across the board, generally a good sign on a turnaround in prices. Leading stocks followed the trading pattern of the overall market. The leaders index was higher by .66%. It sold off hard early then rallied back to close very close to its highs of the session. The index also finished above its important 17dma, a good sign. Volume was much higher and well above average. It looked like it would be another ugly session with significant declines in the major averages. Reports that the Fed would be less inclined to raise rates as often as was expected next year sparked a rally. These kind of reversals can often provide a short term bottom and some support for the major averages. The overall picture in this rally attempt is not encouraging. The follow through last Wednesday after Powell’s speech was only confirmed by the Eureka signal, but not the weekly Coppock or the %E’s. On Tuesday there was a Phoenix signal that negated the Eureka. This means that it was not a well confirmed follow through. There was also a distribution day on the fourth session after the follow through. Usually distribution within three days of a follow through is a bad sign. We should look at the next two or three days trading to see if there will be any strength after this reversal, although the rally that produced the follow through last Wednesday after Powell’s speech hasn’t worked well so far. Also there have not been many stocks that have produced worthwhile gains. The next real test for the major averages will be their declining 50dma’s. If they can’t break through this resistance there will likely be lower prices ahead. Jerry