Leaders Index 5-29

The market had another tough day. It recovered some of it’s early weakness but the major averages could not come close to eliminating their losses. They closed in about the middle of their trading ranges, but still had losses of between .61% on the COMPQ and .75% on the NYA. Volume was a bit higher across the board so there was another distribution day all around and all the major averages are back below their 10dma’s. Leading stocks fell slightly more than the overall market as the leaders index fell .99% on very light volume. The index is now back below it’s 17dma and the 9dma is about to cross below the 17dma. The character of the market seems to have changed recently. Declines are not being met with buying that drives both the major averages and quality stocks back to new highs. There is weakness under the surface and leading stocks are breaking down. The rally is still in effect, but an increased level of caution is warranted. Jerry