Leaders Index 10-22-25

It was a pretty nasty day all around. Some late strength saw the major averages finish off their lows, but the losses were meaningful. The major averages opened a bit lower, but selling soon came in and they sold off hard. Some late buying saw the major averages finish in about the middle of their intraday trading ranges. The COMPQ and the NDX lost .93% and .99% respectively. The SPX declined .53%. Volume was higher across the board, producing distribution on all the major averages. Leading stocks were hit hard for the second day in a row. The leaders index fell 3.94% on the session. The index closed in about the middle of its trading range on higher and slightly above average volume. The index tagged its 50dma at its lows. Today’s action was disappointing on several fronts. Earnings reports so far have not been very good and today’s reports from TSLA and IBM aren’t helping. Distribution is now becoming a problem. The real issue here is the action of leading stocks. For the second day in a row, stocks that have led the rally have been hit very hard. Real damage has been done to leading stocks in what doesn’t look like normal selling in a pullback. The action of the major averages today is also worrisome. Yesterday they held up pretty well as the leading stocks were hit hard. Today the major averages sold off hard and while they closed off their lows it was not a good day. They seem to have broken back into the consolidation they were in before breaking above it on Monday. There are a lot of important earnings reports coming up in the next week or two. In addition a Fed meeting and the summit in South Korea are coming up. The most important item now is the action in leading stocks. If it continues weak it will be bad news. A more defensive posture is called for. Jerry