Jerry Samet
10-12-2019, 12:12 PM
The was indeed a limited deal made yesterday with China on trade. News got out early on Thursday and the market started rallying. There was a gap open in the morning and the major averages went on to produce large gains. The Nasd averages were the strongest with the COMPQ and the NDX gaining 1.34% each. The SPX was higher by 1.09%. Late selling saw all the major averages close near the bottom of their intraday trading ranges. This is negative as it shows that selling came in as prices rose. Volume was higher across the board. It gained 23.76% on the Nasd and 14.22% on the New York. This shows that large institutional players were buying stocks yesterday. Leading stocks were higher as well, but lagged the overall market. The leaders index was up by .58% on the day. The index closed in the lower half of its trading range and volume was a little lower than Thursday. It cleared its 17dma and now must make a run for its 50dma. The move yesterday was powerful and the Marketschool model called a new rally. It was not considered a follow through in IBD. The major averages closed with solid gains, but the late selling was something to keep an eye on. Most of the gains that were achieved during trading were lost near the close and the gains we were left with came from the gap open. The late selling was likely due to market participants not wanting to hold some positions through the weekend. I started work on a new leaders index yesterday. I know it wasn’t a new follow through but I thought that with the existing leaders index being about two months old and the strong action a new one might be appropriate. I must say that I am having a hard time coming up with enough names to make up a new leaders index. This is usually not a good omen for a new rally attempt. The action of the last couple of days was caused by news on a trade deal. The late selling yesterday probably was from people wanting to lock in these higher prices in case of negative news over the weekend or next week. In case we do get a new follow through the weekly Coppock is very close to going negative, which would be good for confirming a potential rally. The %E’s are 10.8% so they are in range, while there has been no Eureka yet. Overall the action was encouraging, but running out and buying heavily right now is risky. The action next week should give us more clues. Jerry