Leaders Index 7-7-14

The market had a nasty sell off today. After opening lower the major averages continued down all day and finished at their intraday lows. The indices that have been doing the best got hit the hardest. The COMPQ was off by .77% while the SPY dropped .39%. Small caps were weakest with the RUT lower by 1.77%. Volume was higher across the board, as would be expected on the day after a half session. Despite that fact the session counted as distribution on all the major averages. The most disturbing thing about today’s trading was the action of the leading stocks. The leaders index fell 1.55% on about flat volume. Many of the best stocks that have had recent breakouts, like KING, GLOG, and JAZZ, are starting to look like they might be failures by falling back below support or back into their bases. The index closed right on it’s 9dma. Holding this short term moving average is good, but quality growth stocks have not been hit this hard in a single session in a long time. The A’s minus E’s have also turned down. While the major averages are all still above their short term moving averages the distribution count is starting to get to worrisome levels. The market, and particularly leading stocks must rally back quickly or the rally could be in trouble. Jerry