Leaders Index 2-9-18

The market had a wild ride yesterday. The major averages declined at the open and sold off to new lows until about two hours were left in the session. There was then a rally that brought the market to solid gains by the close. The COMPQ finished the day higher by 1.44% and the SPX gained 1.49%. The major averages finished high in their intraday trading ranges, a good sign. Volume was higher across the board and well above average on both exchanges. This shows that large institutional players were in there buying as prices fell and then snapped back. Leading stocks followed the same pattern as the overall market. The leaders index made new lows on heavy volume and then rallied later in the day to close high in its trading range. The index was 1.00% higher on the session but moved farther below its 50dma resistance level. This index is clearly broken now. Volume on the leaders index was higher than Thursday and well above average. The market is trying to find some kind of footing after the recent decline. It certainly looked like there was going to be another very negative day as all the major averages and the leaders index made new lows for the correction. A quick reversal, possibly with the help of the PPT, turned that into a positive session. This kind of reversal can often put in a short term bottom and lead to some positive action. We have been looking for some kind of a bounce after the steep decline we have just seen. The quality of the bounce gives you some indication of whether the worst is over for the correction. We haven’t had one yet. Yesterday’s reversal might be the start of a bounce, but we will have to see how the market reacts next week. Right now the market seems to be trying to gain some footing. It could go either way at this point and right now the best course of action is probably to step aside or exercise extreme caution until we have a better picture of where the market wants to go from here. Jerry