The day started strong with Hewlett-Packard leading the way but the rally faded during the day when suddenly the DOW rose to finish up 151 points. Investors came away feeling good with some hope for tomorrow.
In reality, the market's rise was only driven by four stocks: Hewlett-Packard, Exxon, Chevron, and IBM. Those four companies represented 67% of the DOW's rise. The S&P was up 8 points and 80% of its move was driven by the oil, pharmaceutical and computer industries. Furthermore, of all the New York Stock Exchange stocks, only 840 rose while 992 declined.
The conclusion is that the rally today was very narrow and we should expect some weakness tomorrow. When volume is high and the advance/decline ratio is significant, we will get a sustained rally. At this juncture, it is back to testing the lows and probably making new ones.
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