Leaders Index 12-9-13

The major averages had a strong rally on Friday after a good employment report. They had gains of over one percent on the New York averages and a bit less on the Nasd averages. After a solid start today the major averages sold off and closed the day with very small gains. The action on Friday looked solid on a price basis, but there were some items that cast a shadow on the move. Volume was lower across the board so there was not a lot of buying pressure from big players. Volume was also below average. Today’s action was stalling on all the major averages. If you look at the Big Picture you would see that there were three more stocks down in the leaders with volume section then there were advancing issues on volume on Friday. This is unusual in a strong up day in the major averages. We also had a Hindenburg Omen signal on Friday, a sign of a very mature bull market. We have had a cluster of the signals in the last few months, which is just what we saw in 2007 near the highs of the last cyclical bull. Leading stocks have been struggling in the last few days, and the Leaders index was down both Friday and today. Quality stocks continue to underperform the overall market, a negative sign. Overall it looks like we are very late in the current cyclical bull market that began in March of 2009. It is likely that portfolio managers will attempt to protect their bonuses by supporting the market though the end of the year so there may well be more strength into late December. We will have to wait and see if this continues into 2014. Jerry