Leaders Index 5-31-18

The market sold off again today on news of tariffs on steel and aluminum, even on our allies. After opening lower the major averages tried to rally a bit but failed. They then sold off into the close. The most damage was done again in the New York averages, but the Nasd averages lost ground as well. The COMPQ was lower by .27% while the SPX fell .69%. All the major averages finished at their intraday trading lows, showing little buying interest. Volume was higher across the board and above average on both exchanges. This shows that large institutional players were selling stocks. It also adds another distribution day on all the major averages. Leading stocks declined as well with the leaders index falling 1.05%. The index closed in the lower half of its trading range ,but off the lows. It held its short term 9dma moving average, a good sign. Volume on the leaders index declined and was below average. You want to see lower volume as the market or individual stocks sell off. Today’s action was negative because there was a decline on heavy volume. Most of the damage was done in the New York averages as the Nasd averages made a pretty good effort to close in positive territory. The SPX and the INDU held above their 50 day moving averages, but the NYA fell back below both this moving average and its 200dma. The selloff was caused by news and could be reversed by more news. Today’s sell off raises the level of concern, but doesn’t yet change the overall picture. We need a rally in prices accompanied by strong volume to provide convincing evidence that the market will go higher. The tone for trading tomorrow will be set by the employment report that comes out before the open. Jerry