Jerry Samet
10-16-2013, 11:38 PM
The market rallied strongly today on news that there was a deal on the debt limit and reopening the government. The major averages had up days ranging from 1.20% on the COMPQ to 1.38% on the SPY. There was strength into the close and they all finished at session highs. Volume was higher across the board and above average on the Nasd. This combined with the percentage gain produced a follow through on the SPY. The COMPQ didn’t have a large enough gain for a follow through but it did break into new high ground, which turned on the buy switch in the MEM. Leading stocks had a good day as well with the leaders index rising 1.52% on lower and below average volume. There were new breakouts today in stocks such as SCTY and BLOX. Many other leaders that got hit hard in the sell off are recovering nicely. The FTD today wiped clean all the distribution so we now have a fresh count. Today’s follow through amounted to about a 35th day follow through, which is rare. This follow through was also poorly confirmed by the big three indicators we use to confirm follow through days. There was a Eureka signal on 10/10, just five trading days ago, so this indicator confirmed. The %E’s are at 5.2%, below the lower end of the range so this indicator didn’t confirm and the weekly Coppock is not in a position to signal. The deal in Washington today basically just kicks the can down the road, but it gives us some breathing room for now. This may not be the strongest FTD, but we are in a rally now and there are attractive stocks to buy. If it were not for the budget problems there likely would not have been a sell off that caused this recent correction call in the first place. It is ok to buy quality stocks now, but some caution is advisable. Jerry