Leaders Index 4-10-14

The market really got pasted today. The major averages opened lower and spent the rest of the day selling off to finish at or near their intraday lows. The COMPQ led the way lower with it’s worst day in more than two years and declined 3.10%. The SPY was not far behind with a loss of 2.09%. All the major averages under cut their recent lows and are establishing patterns of lower highs and lower lows. The SPY broke below it’s 50dma while while the COMPQ fell further below this important moving average. Volume was higher across the board, which showed that large players we selling with conviction. Leading stocks got hit along with the overall market and there were no stocks in the IBD 50 that were up on the day. The leaders index fell 2.61% on higher and above average volume. After breaking below it’s important 17dma on Monday it tried to regain this level in the last two days and has failed. It looks like the 50dma is not far away. The pattern of high volume sell offs followed by lower volume rebounds continued. This is a very negative development as it shows very little buying interest. This is the worst decline we have had in a long time and the level to watch now is eight percent down from the highs. This is the point where most corrections stop and if they don’t at least an intermediate correction is in the cards. The COMPQ is now down about seven percent from it’s recent high and the eight percent level is currently at 4021. If this level doesn’t hold, and right now that seems likely, we will almost certainly see the first real intermediate term correction, or worse, we have had in over a year. Jerry