Jerry Samet
03-24-2020, 06:23 PM
The market rallied hard today as it looked like the rescue package would shortly pass Congress. The major averages gapped higher at the open and spent most of the remainder of the session working their way higher. All the major averages finished at their intraday trading highs as buying was strong into the close. The percentage gains were large. The New York averages were a little stronger with the SPX gaining 9.38% and the INDU up 11.37%. The COMPQ and the NDX rallied 8.02% and 7.81% respectively. Volume was mixed but very close to yesterday’s levels. It was up by .79% on the New York and lower by .34% on the Nasd. Leading stocks rallied hard as well with the leaders index gaining 11.51% on the day. The index closed high in its trading range on volume that was a little lower than yesterday. The market looked in the last couple of days like it might try to put in a short term bottom. The positive reaction to news of the rescue package reinforces that. Hopefully it will come through. We may have seen the end of the first down leg of this bear market. While these big up days feel good after the recent declines, they are typical bear market action. We are in a rally attempt and I would not be surprised to see a follow through in the next week or so. Follow throughs in bear markets are very failure prone, especially early ones. Right now the %E’s are at 58.9%, a very high number. The chances of a follow through turning into a real tradable rally with the %E’s at this level are slim. If one occurs and you must get back in trade small so you don’t get hurt to badly if you are wrong. Preservation of capital remains the primary objective. Jerry