Leaders Index 3-25-15

It was an ugly day today. Yesterday I said that the pullback from recent highs a few days ago was orderly and that little real damage had been done. That changed today. The major averages opened lower and continued down the entire session. Late weakness saw all the major averages close at their intraday lows. The COMPQ fell 2.37% while the SPX declined 1.46%. The New York averages are now back below their 50dma’s while the Nasd averages remain slightly above theirs. Volume was higher across the board so there wad distribution on all the major averages. The distribution count is at levels that indicate trouble for the markets. Leading stocks got hit as well with the leaders index declining 3.89% on much higher and above average volume. The index broke through it’s 9 and 17dma’s, which is a big red flag. The 17dma is a major support level for leading stocks so breaking below it is important. We are seeing a continuation of action we have seen for a long time now. Whenever it looks like there may be something of a trend developing there is a sharp reversal in the other direction. This is not unusual this late in a cycle and I think is being exasperated by all the QE going on. One of the definitions of a successful follow through is that the rally last at least five weeks. This gives you time to build up enough profits so you have time to get out with worthwhile gains when the market and leading stocks roll over. Like past moves this one left little time to build those gains. I don’t know if the market will continue lower into a real correction or reverse again and move higher, but after today’s action protecting capital is issue number one. Jerry