Leaders Index 2-5-14

The market sold off again today. After good sized early losses the major averages rallied off their lows but couldn’t get back into positive territory as they under cut recent lows. They closed in the upper half of their intraday ranges so the damage today was limited. Volume was mixed, higher on the Nasd but lower on the New York. This produced distribution on the COMPQ. Leading stocks performed much worse than the overall market as the leaders index fell 2.47% on higher and well above average volume. The index fell decisively below it’s 50dma and joins all the major averages below this important moving average. The damage to leading stocks was widespread as many were down multiple percentage points on very heavy volume. The correction is deepening and the charts of all the major averages and the leaders index are controlled by declining short term moving averages. The next step for the market is down eight percent from it’s highs, which is 3906 on the COMPQ and 1702 on the SPY. If this level doesn’t hold we are likely to go considerably lower. Jerry