Leaders Index 7-27-17

The market had a nasty reversal today. All the major averages opened strong and set new highs early, mostly on good earnings from FB. About midsession a wave of selling came in and all the major averages lost their gains and went into negative territory. A late rally moved them off their intraday lows but could not make up most of the decline. The Nasd averages were the hardest hit with the COMPQ down .63% and the NDX off by .57%. The SPX finished the session lower by just .10%. The SPX closed in the upper half of its intraday trading range while the COMPQ finished in the lower half of its trading range. Volume was higher across the board and above average on the Nasd. This produced a fresh distribution day on the Nasd averages, the second in a row. The decline in the SPX was too small for distribution. Leading stocks were very strong early and many reversed on high volume. The leaders index was off by 1.26% and volume was very high. The index closed in the lower half of its trading range, but it still held above its short term 9dma. It is good that it held short term support and the chart of the index still looks ok. The kind of reversal we saw today is dangerous. It looks a lot like the one we saw on 6/9. That didn’t produce a serious correction, but leading stocks and the Nasd averages sold off enough to knock you out of positions. I don’t know what caused the reversal and it really doesn’t matter. The markets and leading stocks need to rally quickly and with some real conviction or more caution is warranted. Jerry