Leaders Index 9-9-16

The market really got pasted yesterday. The major averages gapped lower at the open and it was all downhill from there. The selling was constant throughout the session and late pressure saw all the major averages finish at their intraday trading lows. There was not a hint of any support. The COMPQ fell 2.54% on the day while the SPX lost 2.45%. Volume was much higher across the board and well above average. This shows that large institutional players were dumping stocks in a big way. Leading stocks were hit hard as well with the leaders index falling 3.55% on very heavy volume. The index lost it’s recent break into new high ground and is now below the consolidation range it just broke out of. The index held it’s important 50dma, but the shorter term support levels are history. Many charts of leading stocks are now broken. The major averages are all now below their 50dma’s and the charts look ugly. This is the worst decline since the Brexit vote. The sell off seems to have been caused by two Fed governors hinting that rates might be raised at the September meeting. The market immediately priced this back in with a large decline. This is the problem we face right now. This is a central bank driven market and it can have sharp moves in either direction. If a Fed member comes out next week and says that there will probably not be a rate increase this month there will likely be a rally and some of yesterday’s losses would be recovered. It is tough to navigate this environment and easy to get shaken out of positions. The damage done yesterday was considerable. If the market doesn’t snap back early next week then the rally is likely finished. Protecting yourself is the key right now. Jerry