Leaders Index 8-7

The market opened weak today and after some decent sized losses early had a mild rally later in the session to recover a good portion of it’s losses. The major averages closed in the upper half of their trading ranges, which is about the only good thing you can say about today’s trading. Volume was mixed, higher on the Nasd and slightly lower on the New York. This and the .32% decline of the COMPQ was enough to produce the seventh distribution day for this average. The New York averages barley missed a fifth day of distribution. Leading stocks generally got hit harder than the overall market as the leaders index fell 1.28% on much higher and above average volume. After setting a new high on Monday the index has now had two successive declines on higher volume each day. This leaves the index sitting right on it’s 17dma. It will be a very negative sign if the index breaks below this critical moving average. The rally is kind of at a cross roads now. The distribution count is dangerously high and any weaker action on volume from here will likely kill it. The MEM is at one, or only thirty-five percent invested. It would be a good idea to lower exposure now and probably get out if there is any more weakness. Jerry