The market finally staged a nice bounce yesterday after the PCE report came in friendly. The major averages opened higher but mostly traded sideways from there. All the major averages finished in about the middle of their intraday trading ranges. The COMPQ and the NDX gained 1.03% each. The SPX rallied 1.11%. Volume was significantly lower across the board, not what you want to see on a rebound. Leading stocks rose as well with the leaders index gaining 1.37% on the day. The index closed in the upper half of its trading range on lower and below average volume. The market reacted well to a friendly PCE report and rallied out of the gate. There was finally some positive action, but it was not enough to wipe out the weakness earlier in the week. The SPX regained its 50dma, but just barely. The NASD averages remain below this important moving average. Leading stocks are suffering also as the leaders index continues to live below its 50dma. The rally is in real trouble now and it must rally strongly and quickly to get out of it. Next week is the biggest week of the earnings season with several important tech companies reporting. Also there will be a Fed announcement on Wednesday and the employment report on Friday. If the market doesn’t react well to these reports the rally will likely be over. Jerry
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