Leaders Index 5-17-17

The market really got pasted today. The selloff was mostly blamed on the continuing problems in Washington, but whatever the reason the you have to follow the action of the major averages and the leading stocks. Both were hit hard today. The major averages opened broadly lower and continued down the rest of the session. The COMPQ closed with a loss of 2.57% while the SPX was lower by 1.82%. All the major averages closed at their intraday trading lows as selling was consistent throughout the day. Volume was higher and above average on both exchanges, showing that large institutional players were heavy sellers today. The decline was also enough to produce a real distribution day on all the major averages. Leading stocks were hit harder than the overall market, which is not unusual in a big selloff. The leaders index fell 3.95% and closed low in its trading range. It cut through its short term 9dma and 17dma. The index remains above its critical 50dma and volume was huge, the highest since 3/17. The relative strength line of the leaders index also took a hit. There was real damage done today. For the first time problems in Washington had a negative effect on the market. If the agenda that was much of the basis for the rally that began after the election is in trouble much or all of that rally could be reversed. I have been saying that the New York averages were in a consolidation and that the direction they took would tell us a lot. Today they broke badly and all the New York averages are below the important 50dma. It looks like they have broken to the downside. You should watch your individual positions to determine how much if any selling you will do, but a higher level of caution is warranted. The major averages and the leaders index must rebound convincingly and quickly or more trouble is likely ahead. Dance close to the exits until then. Jerry