Leaders Index 2-29-16

It was a weak session today with the market opening higher and then reversing lower. For the first couple of hours of trading the major averages were higher, mostly after China said it would increase it’s QE. The rally didn’t last as all the major averages topped out after two hours of trading and sold off for the rest of the session. All the major averages ended the session at their intraday lows, a sign of a lack of support. The COMPQ finished down .71% while the SPX fell .81%. Volume was higher across the board, showing that large institutional players were selling stocks. In fact a lot of selling in the last fifteen minutes knocked the major averages to their lows. This produced distribution on all the major averages. Leading stocks did better than the overall market with the leaders index gaining .28% on the day. The index tagged it’s 9dma at it’s lows but held this short term support level. It closed near it’s intraday low and the slightly positive price change producing a new high in the relative strength line. Today’s action added to the distribution count but it is still low, but the SPX fell below it’s critical 50dma after regaining it last Thursday. The DOW also lost it’s 50dma today. This moving average is the most important thing on the chart right now and the fact that the SPX couldn’t hold it and the COMPQ never even reached it is worrysome. The final determining factor in the success or failure of any rally is how quality stocks act, can you make any money. Right now the answer is no. A very small number of stocks are producing single digit gains but most are either going nowhere or rolling over. You can have some positions now if you want, but you have to wonder if it is really worth the bother and the risk. Jerry