Leaders Index 12-27-13

The market took a breather yesterday as the major averages opening a bit higher but sold off slightly for the rest of the day. They finished with small losses and at their intraday lows. The COMPQ lead the way down with a loss of .30% and the SPY was off only fractionally. Volume was higher across the board, but still well below average in keeping with the holiday season. The higher volume and the loss in the COMPQ were enough to produce a distribution day on this average, bringing the total to six on all the major averages. Leading stocks were generally lower on the session also with the leaders index falling .68% on higher but below average volume. The leaders index has spent the week consolidating recent gains in a constructive manor. It remain within fractions of it’s high and the relative strength line is down a bit but still near it’s highs. Both quality stocks and the major averages are acting well and this is a positive sign for the rally. There are some dark clouds out there, mostly the high level of distribution days and the extremely high level of bullishness. I have been tracking the Investors Intelligence numbers for over 20 years and have rarely seen numbers like we see today. They are currently at 59.6% bulls and only 14.1% bears. These are extreme numbers that are only seen near important tops. The indicator is not exact in it’s timing but when you see bullish advisors above 55% the market is usually on borrowed time. We have never seen the kind of money printing we see today and that is likely prolonging the cycle. We will get a better picture of where the market is going after the holiday season when large and small players are back at work. Jerry