Leaders Index 5-2-14

The market was fairly quiet yesterday after the employment report. On the surface it was a good report, but looking further there were problems. Most of the increase in jobs were due to the birth/death adjustment and the decline in the unemployment rate was due to people leaving the work force. The major averages were pretty much flat on the session with the COMPQ lower by .10% while the SPY was also off by .10%. The major averages also closed near their intraday lows. Volume was lower across the board, showing that there was not much interest either way by large players. Leading stocks did better than the overall market with the leaders index rising .80% on lower and about average volume. The index has been improving for the last few days and is now back above it’s important 50dma as well as the 17dma. The fact that it broke above these important moving averages on fairly light volume lessens some of the impact. The situation seems to have improved in the last few days, more so in the leading stocks then the major averages as can be seen in the relative strength line of the leaders index. We need some advances in both the overall market and the leading stocks with some real conviction. We may get back to a new technical rally with the New York averages moving to new high ground, but it would be much better if we got a real follow through that was well confirmed. Until then it is a good idea to keep most of your powder dry. Jerry