Jerry Samet
08-10-2013, 11:45 AM
The market sold off yesterday as the major averages declined between .20% on the COMPQ and .40% on the SPY. The decline was tempered by volume that was lower across the board, but that would be expected on a Friday in the summer. Leading stocks did better than the overall market as the leaders index rose .45% on much lower and below average volume. Quality stocks are acting a little better than the major averages as the RS line of the index made a nominal new high. The rally is still intact, but the market appears to be struggling more and more. Recent new highs in the major averages have not held and they have retreated in the last few days. The distribution count is very high and the MEM is at one, or only 35% invested. We are very late in the current cyclical bull market and thus the likely hood of any correction turning into a serious decline is high. There also have been other late cycle warning signs, such as a cluster of Hindenburg signals in the last couple of weeks. We have not had any serious sell signals yet, but the market is acting a bit tired and any more distribution will likely end the rally. Dancing close to the exits is a good idea. Jerry