Leaders Index 10-24-18

The market really got pasted today. After opening lower the market spent the rest of the session declining and the selling intensified into the close. All the major averages finished very close to their intraday trading lows, showing that there was no buying support as prices fell. The Nasd averages were the hardest hit with the COMPQ and the NDX fell by 4.43% and 4.63% respectively. The SPX was off by 3.09%. The biggest hit was in the semiconductor stocks as the SOX dropped an incredible 6.61%. Volume was higher across the board, the telltale sign of large institutional players dumping stocks. Leading stocks were hit hard as well with the leaders index declining 4.41%. It closed near the bottom of its trading range, mirroring the overall market. This is a new low for the leaders index for this decline. Volume was higher as leading growth stocks were sold almost wholesale. Only four stocks in the IBD 50 were higher on the day. After yesterday’s reversal you would expect some sort of continuation and an advance today. It didn’t happen. The market was lower from the start and just sold off consistently the entire session. The major and secondary averages all made new lows for the move and nothing at this point seems like it will hold them up. The selloff in the semiconductor stocks is pretty amazing and the SOX has had a death cross. All the major and secondary averages are below their long term 200dma’s, some by a considerable degree. The 50dma’s of these averages are closing in on their 200dma’s and the longer term 200dma has either flattened out or turned down, a very negative sign. In addition the IBD 50 is below its 200dma for the first time in over two years. The COMPQ is now down from its highs by more than 12%, firmly in intermediate term correction levels. The market has sold off several times in the last two or three years and looked like it was going into a serious decline only to turn around and rally back. That may well happen again now, but this time it feels worse. You never know what the market is going to do and have to watch how it unfolds. You always let the market tell you what it is going to do, but right now a solid case can be made that we are in a bear market. Jerry