Leaders Index 7-1-16

The market took a break after a three day solid rally following the Brexit selloff. Markets have regained pretty much all of their losses following the vote. After a little early strength the major averages traded flat the rest of the session and finished with small gains. The COMPQ rallied .41% and closed in about the middle of it’s intraday trading range while the SPX was higher by .19% and finished low in it’s trading range. Volume was lower across the board and below average. This is to be expected on a summer Friday before a long holiday weekend. Since IBD called a third day follow through the distribution count has been wiped clean. These follow through days, especially in summer have a bad track record, but I decided to create a new leaders index. It consists of 21 stocks in 18 different industry groups. The index is in new high ground and will hopefully give us a better warning of weakness than an index that is struggling to get into new high ground. I have included a text file with the stocks in the new index. Yesterday’s action was fairly positive. After three days in a row of strong gains some pullback would not be unusual. The fact that the major averages held those gains and even built on them a bit is encouraging. The major averages are back at resistance levels that have turned them back for quite a while. The SPX had slightly regained the 2100 level and is now challenging it’s all time highs of last summer. The COMPQ has a bit further to go. It must regain the recent highs set in early June and late April. If the major averages can clear these resistance levels, particularly with strong volume, we could see higher prices. If they are turned back again then lower prices are likely ahead. I hope everyone has a good 4th of July. Jerry