Leaders Index 1-27-14

When a market sells off hard like happened last week the quality of the bounce is critically important. A couple of hours before the open today it looked like there would be a decent bounce, but as the open approached that hope seemed to fade. The market opened a bit higher but could not hold those gains and quickly sold off. There was a rally attempt during the day and the major averages finished off their lows but a decline into the close lead the major averages to finish in the lower half of their trading ranges. The COMPQ was the worst off with a decline of 1.08% while the SPY fell .49%. Volume was lower across the board so there was no official distribution today, but it sure felt like it. Leading stocks again got hit harder than the overall market with the leaders index down 2.49% on higher and above average volume. This index had distribution today. The damage was widespread as only seven stocks in the IBD 50 were up on the day. The leaders index closed fractionally below it’s 50dma and joined all the major averages below this critical moving average. It has been costly in the last year trying to call a top in the market and with the Fed meeting this week you never know what will happen, but if this rally isn’t dead it is clearly in critical condition. Jerry