Leaders Index 1-27-15

The market had a pretty ugly session today. The market gapped down at the open, mostly because of recent disappointing earnings reports. After early declines of about two percent the major averages rallied to cut those losses about in half until late weakness brought them back near their lows. All the major averages closed near their intraday lows with the COMPQ leading the way down with a loss of 1.89% while the SPX declined 1.34%. Volume was mixed, higher on the Nasd and slightly lower on the New York. This produced another distribution day on the COMPQ. Today’s action pretty much reversed the big gains last Thursday on the ECB announcement. The major averages regained their 50dma’s on that day but lost them today. When a major average, or a stock, takes that important moving average back and then lose it more than once as we have in recent days is is a very negative sign. Leading stocks outperformed the overall market today with the leaders index losing only .57% on higher but still below average volume. The index is actually holding up fairly well. It isn’t making any real progress but it is holding above it’s important short term 9 and 17dma’s. The relative strength line of the index made a new high today. The reversal of last Thursday’s action that caused IBD to go back to a confirmed uptrend shows how difficult the current environment is. Unless you are a very short term trader it is difficult to make any progress. The sidelines are a pretty attractive place to be right now. Jerry