Leaders Index 3-1-18

The market took another hit today. After opening somewhat lower the major averages spent most of the day declining, especially after the announcement of new tariffs from Washington. The COMPQ finished with a loss of 1.27% while the SPX fell 1.33%. All the major averages closed near the bottom of their intraday trading ranges, a negative sign. Volume was higher across the board and above average on both exchanges. This produces a fresh distribution day on the major averages. Leading stocks sold off as well with the leaders index falling 1.29% on the day. It closed slightly below its short term 9dma support level, and also closed in the lower half of its trading range half of its trading range, showing some lack of support. Volume was higher and above average on the session, showing distribution in quality growth stocks as well as the overall market. The chart of the leaders index is holding up better than the charts of the major averages, about the only good thing you can say right now. The picture continues to darken. There have now been three days of large declines each on successively higher volume. It is also the third distribution day in a row. The count is getting high and a cluster like it looks like we are getting is very negative. The pattern of high volume on down days and lower volume on rally days is a classic sign of large institutional players unloading stock. It isn’t official yet as the major averages have not broken below the level of the follow through day, but it is hard to argue that this is going to end in anything other than a failure of the Valentine’s Day follow through. Jerry