Leaders Index 1-13-14

The market started the day off trying to hold it’s own but couldn’t. It turned into a nasty sell off for both the major averages and the leading stocks. The COMPQ lead the way down with a decline of 1.47% while the SPY was off 1.26%. Volume was higher across the board and above average on both exchanges. A late sell off caused the major averages to finish at their lows off the session. The decline combined with the higher volume produced distribution days on all the major averages. They also closed below their 21dma’s so they are now below both important short term moving averages. Leading stocks got hit also although the leaders index was off less than the overall market, declining .71% on higher but slightly below average volume. This produced distribution here as well. The leading stocks that got hit the most were the ones that were holding up best or had recent breakouts or buyable gap ups, like TASR and BITA. It is a negative sign when recent breakouts fail. The day’s action produced some ugly red candles on the charts and IBD switched to market under pressure. It is hard to tell what to do in this situation as there have been many quick declines in the last twelve months that have turned around, although when everyone is trained to expect a recovery we could get a real decline. It is hard to know what to do so a defensive stance would probably be a good idea. An interesting item right now is gold and silver. They have been in a cyclical bear market within an overall secular bull market. The weekly Coppock on both is close to signaling and if they close the week where they are now we will get the signal so there would be at least an intermediate term rally in both. Even more important is the fact that the monthly Coppock in both is curling after a long decline. This would indicate a new cyclical bull market in both that would produce a multi year rally. They could be a good place to park money and make some gains if the stock market rolls over. Jerry