Leaders Index 7-7-15

The market sold off pretty hard early and it looked like it was going to be an ugly session. After a couple of hours the major averages staged an intraday reversal and headed higher, erasing all the early losses. The business networks were talking about rumors of a short term measure to help Greece. The major averages all closed at their intraday highs, with the COMPQ up by .11% and the SPX higher by .61%. Volume was higher across the board, so large institutional players were buying stocks. The SPX traded below it’s 200dma during the session, but closed back above this important moving average. Leading stocks also reversed large early losses, but didn’t get the buying interest that the major averages got. The leaders index closed with a decline of 2.11% on the day, but finished near the top of it’s trading range. The index traded below it’s 50dma almost all session and closed below it for the first time. Quality growth stocks are looking sickly and even with the late strength only six of the twenty-one stocks in the index closed in positive territory. Several components of the index, including CMCM and NHTC were hit hard. The relative strength line of the index fell today and is now sitting on it’s 50dma. This shows that quality growth stocks have been underperforming the overall market for almost three weeks now, a negative sign. The kind of intraday positive reversal we saw today usually results in at least a short term low and it would not be unexpected to see the market rally a bit from here, but leading stocks are flashing warning signs. I will be away for a few days, the updates will resume on Monday. Jerry