Leaders Index 4-28-16

It was a negative session all around today. The market opened lower after the Japanese central bank not easing further caused a selloff in Japan. The major averages had modest losses until a real decline set in during the last two hours of trading. The COMPQ finished with a loss of 1.19% while the SPX fell .92%. Both closed near their intraday trading lows with no support coming in near the end. This is in contrast to the action of the last few days. Volume was higher across the board, producing a new distribution day on all the major averages. Leading stocks sold off as well, but the leaders index did not decline as much as the major averages. The leaders index fell .55% on the day and closed in the lower half of it’s intraday range. Volume on the index was a lot higher and well above average, showing that large institutional players were selling today. The index traded above it’s short term 9dma and 17dma but could not hold the gains. It held above it’s 50dma support level and remains between these support and resistance levels. Today’s action was the worst we have seen in a while. The charts of the major averages are starting to look a little ragged as the COMPQ joined the NDX in losing it’s important 200dma. The news from Japan was telling. Their market sold off not because their central bank tightened, but because it didn’t loosed further. This is the first time this has happened in a major market and shows that maybe we are reaching a point where just maintaining high QE levels and negative interest rates isn’t enough anymore and only increasing levels will satisfy the markets. This is a dangerous development and looks akin to a drug addict needing larger and larger doses to get the same effect. The final outcome of such situations is rarely good. Jerry