Leaders Index 2-23-16

The market sold off today with the decline in oil prices. The major averages opened lower and sold off for the rest of the session, closing at their intraday lows. This shows little buying interest as prices fell. Volume was lower across the board, so there was not a lot of selling by large institutional players. The COMPQ fell 1.47% while the SPX was lower by 1.25%. Leading stocks were lower as well, but declined less than the overall market. The index declined .37% and closed in the lower half of it’s intraday range, but well off the lows, of the session. This outperformance caused the relative strength line of the index to make a new high. Volume on the leaders index was lower than yesterday and well below average, so there was little selling pressure in quality growth stocks. The lower volume today on a meaningful price decline allowed the market to avoid distribution. After the rally of the last week and a half it is not unusual to see some selling. The charts of the major averages still look solid after the latest follow through, but the real problem is there is still nothing you would really want to buy. Rallies that have legs produce an abundant number of attractive stocks. The action today makes it much more difficult for the weekly Coppock to signal by the end of the week and confirm the follow through, making it less likely it will be successful. The declining 50dma is still the most important resistance the major averages face. If it can’t break above this resistance with some conviction the rally attempt will likely not go far. Jerry