Leaders Index 4-7-14

The market sold off hard again today as the correction deepened. After opening lower the major averages sold off all day and after a late rally attempt failed they closed near their intraday lows. The COMPQ led the way lower with a loss of 1.16% while the SPY was down 1.08%. Volume was mixed, slightly lower on the Nasd and higher on the New York. Leading stocks again got hit worse than the overall market with the leaders index falling 2.86% on extremely high volume. It cut through the important 17dma like it wasn’t there. The three big red candles on successively higher volume make for an ugly chart. The relative strength line of the index is also approaching it’s 50dma. There have been many times recently when the market threatened a correction and then turned around to rally to new highs. This time it has a different feel to it. The extreme damage to quality growth stocks along with a rotation to defensive big caps like we are seeing now rarely ends well. This time it looks like we could get the first real intermediate correction in a year. Shorting in a QE environment is risky, so cash is the place to be right now. Jerry