Leaders Index 5-17-16

The market reversed again and lost all of yesterday’s gains, The major averages opened lower and continued to decline for the rest of the session. All the major averages closed at or very near their intraday trading lows, a sign that there was no buying support as stocks sold off. The COMPQ declined 1.25% while the SPX fell .94%. The worst damage today was in the small caps as the RUT was off by 1.66%. Volume really told the story today. It was higher across the board after being mixed on yesterday’s advance. This added a distribution day on all the major averages and continued the pattern of high volume declines. Big institutional players were selling stocks today. Leading stocks were hit worse than the overall market. The leaders index fell 2.39% and closed low in it’s intraday trading range. The index has now pretty clearly broken down and the lows today were below the bottom of the consolidation range it has been in for weeks. The decline was not caused by one or two components of the index but over half of the stocks in the index fell by multiple percentage points. The action of the market today shows again how difficult it is to make progress in either direction. We are in a tug of war between a market that clearly wants to go down and central banks that are determined to prop it up. The ultimate resolution of this is that the market will go where it wants, but it is difficult to know how long the central banks can succeed in preventing it. Jerry