Leaders Index 12-9-20

The market showed some early small gains but they didn’t hold. Selling came in and the major averages worked their way lower for pretty much the remainder of the session. All the major averages finished near their intraday trading lows. The Nasd averages were the weakest with the COMPQ and the NDX falling 1.94% and 2.15% respectively. The SPX fell .79%. Volume was higher across the board. It rose 7.99% on the Nasd and 15.92% on the New York. This combined with the price declines produced a fresh distribution day on all the major averages. Leading stocks were hit as well with the leaders index falling 3.31% on the day. The index closed low in its trading range on lower and well below average volume. The lighter volume showed that there was not a lot of selling pressure in quality growth stocks. The market took a hit today on higher volume. That is never good. Early gains were lost and the market sold off into the close. The leaders index seems to have been turned back at a confluence of its 9dma and 17dma. After breaking below these moving averages you want to see the index rally above it with conviction. We have not seen that yet. The underperformance of leading stocks against the overall market is something to watch. It is not pronounced enough to cause serious concern yet, but further weakness in quality growth stocks could change that. In the overall picture of the recent advance today’s action was not enough to change the picture of a market working its way higher, but there are things to watch. The recent action in IPO’s shows pretty extreme bullishness. I still think we will likely see higher prices through year end, but dancing close to the exits is probably not a bad idea. Jerry