Leaders Index 12-31-15

2015 is finally over. It was a tough year for the markets and the last day of trading was no different. The major averages opened lower and it was all down hill from there. Late weakness saw all the major averages finish trading at their intraday lows. The COMPQ closed down 1.15% while the SPX fell .94%. Surprisingly volume was higher across the board, unusual on the last trading day before the New Years holiday. This showed that there was real selling by large institutional players and added distribution on all the major averages. The big gain last Tuesday that caused IBD to go back to a confirmed uptrend call was more than wiped in in the next two days. Leading stocks closed the year lower as well with the leaders index declining 1.00% on higher but still below average volume. The chart still looks good, but that is not unusual with a new index. The index closed just above it’s short term 9dma and remains above all the short term and intermediate term moving averages. 2015 was the hardest year since the current bull cycle began in March of 2009. The major averages were mostly flat to slightly down for the year, with small gains in the COMPQ. In March of 2016 the current bull market cycle will be seven years old. It is very rare for a cycle to last this long, and were it not for all the QE by central banks around the world it would likely have ended much sooner. We are seeing signs of very late cycle action all over the place, from the fact that classic canslim breakouts have not really worked for a couple of years now to the narrowness of the rally. If you take the top ten or twelve mega cap stocks out of the major averages they would be clearly down for the year 2015. The narrowness of the advance is typical for aging bull markets. The declines of last August certainly looked like the end, but the major averages rallied back. They did not however retake their old highs. Bear markets are like recessions in that you don’t know for certain you are in one until they are half or more over. The SPX saw it’s high on 5/20 at 2135 while the COMPQ hit it’s high on 7/20 at 5231. If these major averages can’t get back above these highs then we are in a bear market now, we just don’t know it yet. The charts of all the major averages and secondary averages look pretty poor. The NYA, the broadest measure of New York stocks, looks much worse than the SPX. The averages for small and mid cap stocks look even worse. The early phases of bull markets are the easiest to make money in while the late phases are tough. I have always said that you should be in the market when it is easy to make progress and at the beach when it isn’t. It has been tough for a couple of years now, and although there have been a couple of short periods when the market did rally they were short and rare. I am really sick of this cycle and would like nothing more than to see a real bear market in 2016 that will clear the decks for a new bull cycle that will provide the opportunity to make large profits. We will have to see how the market unfolds in 2016. I hope everyone had a good New Year and I look forward to 2016. Jerry