Leaders Index 4-22-16

The market had a mixed session yesterday. The New York averages started out weaker but then rallied a bit then spent the rest of the session bouncing around unchanged before closing near Thursday’s levels. The Nasd on the other hand took a hit yesterday. The reason for the divergence was a handful of large cap tech stocks. Poorly received earnings reports for GOOGL and MSFT among others caused the Nasd averages to decline. The COMPQ fell .80% while the NDX declined 1.47%. This compares to the SPX being flat at 0.0% change. All the major averages closed high in their intraday trading ranges, a sign that some buying came in near the day’s lows. Volume came in higher on the Nasd, which produced distribution on the Nasd averages, bringing the total for the COMPQ to six, a high number. IBD had volume lower in the New York, while esignal had it slightly higher. It didn’t really matter that much because the small change in the averages would not have produced distribution. Leading stocks did worse than the overall market again with the leaders index falling .38% on the day and closing slightly below the mid point of it’s intraday trading range. The index tagged it’s 50dma during the session but closed above this critical moving average. Volume on the index rose and was well above average, showing that there was real selling in these stocks and adding distribution on the leaders index. High quality growth stocks have underperformed the overall market since the current rally started on 2/11. There have been a fair number of good setups, but very few have gone on to produce worthwhile gains. As I said earlier in the week we are at a crossroads. Money printing and low or negative interest rates are forcing more and more money into the stock market, much of which should not be there. The major averages have come back to within a fraction of their all time highs set last summer. If they break above these levels than the decline we have seen since last summer was nothing more than a very steep correction in an ongoing cyclical bull market. It we fail here and the major averages decline again then the rally since mid February has been an intermediate term rally in a bear market. We will have to wait and see how all this plays out. Jerry
Again, I have set up a Google Group for my updates that anyone can sign up to and get the updates directly from me. This is a better way to get them than having them forwarded to you or getting them from one of the groups I send them to. I will continue to post them to the groups I am now, but over time this will become my primary method for distribution of my updates. If you already have a Google Groups account just type in Jerry Samet’s Leader Index Updates and sign up. If you don’t then just sign up for an account(it is easy) and type in the same group name. If it is a new account you must make sure that the email settings are set to all emails. The default setting in Google Groups is for no emails.