Leaders Index 12-2-19

The market put in some solid action when I was away last week. Near the end of the previous week I was getting a little nervous as there was some weakening in leading stocks. That resolved itself as last week quality growth stocks did well on higher volume as the leaders went into new high ground. They have since gotten hit again today. The market opened a little stronger but got hit after weaker than expected economic news and more discouraging news on trade. The trade news is all over the place but weaker economic news is more important. There were losses across the board but the Nasd averages were a little weaker. The COMPQ and the NDX were off by 1.08% and 1.07% respectively. The SPX declined .86%. All the major averages closed at or near the bottom of their intraday trading ranges. Volume was much higher than Friday. It was up by 63.86% on the New York and 79.96% on the Nasd. This large increase was due to Friday being a holiday half day, but it was high when compared to volume earlier in the week. It also qualifies as a distribution day. Leading stocks were looking pretty strong, but took a good sized hit today. The leaders index declined 3.59% and closed low in its trading range. Volume was higher and above average. The index tagged its 17dma but held it, but not its short term 9dma. In my last update a week ago Friday I said I was a little concerned about a little weakness in leading stocks. The leaders index pulled back to its 17dma on lower volume, then rallied back to new highs on stronger volume. That was encouraging. Today’s action again makes me a little nervous. Much of today’s decline was caused by news stories that can be reversed with more news stories. The major averages and the leaders index were both looking fine before today’s action. The leaders index must now hold its important 17dma and the major averages must hold the highs of the brief consolidation they made before moving into new high ground last week. I still think the weight of the evidence points to the market rallying into year end, but if these support levels are broken the picture will darken. Jerry