Jerry Samet
09-08-2015, 08:21 PM
The wild ride continued today with the market rallying strongly. The major averages were up hard at the open and after going sideways late strength allowed the major averages to finish at their intraday highs. The COMPQ gained 2.73% while the SPX rose 2.51%. Volume was higher than Friday’s level so today’s action constituted a follow through. The volume comparison was a very easy one as Friday was the day before the Labor Day weekend and is one of the lowest volume days of the year. I said last week that the extreme volatility we have been having lately could trigger a follow through and that is what happened today. Even with today’s action the major averages are still below the highs of the reaction rally after the sell off. Leading stocks were up strongly as well. When there is a follow through I usually create a new leaders index. I did so again this time, but had a very hard time finding stocks that fit the bill. The new index I put together has only fifteen stocks, making it a weak index. I will post both this one and the last one for a while for comparison. The fact that it was so hard to find stocks says something about the quality of this follow through. Of the three indicators I use to confirm follow throughs only one confirmed. There was a Eureka signal today, but in the last two weeks there have been two Eureka signals and two Phoenix signals, so this one is suspect. Neither the Coppock or the %E’s signaled. The recent action of the market and the lack of attractive stocks to buy means that this follow through is suspect. New purchases should be make very carefully. Jerry