Leaders Index 12-11-15

It was an ugly session yesterday to say the least. The major averages gapped lower at the open and worked their way lower the rest of the day. The COMPQ led the way down with a loss of 2.21% while the SPX fell 1.94%. All the major averages finished at their intraday lows, a negative sign showing there were no interested buyers at the lower prices. Volume was higher across the board and above average on both exchanges. This means that large institutional players were heavy sellers again yesterday. It also continues the pattern of sell offs on high volume and rallies on lighter volume, not what you want to see. Leading stocks got nailed as well with the leaders index falling 2.99% on higher and above average volume. This showed distribution in quality growth stocks. The index closed further below it’s important 50dma and the short term 9dma and 17dma are curling down and close to breaking below the 50 day. The relative strength line if the leaders index continues lower, so leading stocks are performing worse than the overall market. There were several reasons given for yesterday’s decline, oil being the most prominent. Yesterday was one of the worst days we have had in a long time. The SPX cut below both it’s 50dma and 200dma in a large red candle. All the charts of the major averages look terrible and IBD went to a correction mode. The Fed will announce the results of it’s meeting on Wednesday and it will be very interesting to see the market’s reaction to it’s decision regardless of what it is. This is the time for protecting capital and not taking chances. Jerry