Leaders Index 1-3-14

The market opened with gains yesterday and it looked like we might regain some of Thursday’s losses. The major averages were unable to hold the advance and the major averages sold off the rest of the session and a sell off near the close caused them to finish at the lows of the day. All the major averages were about unchanged on the session and volume was lower across the board. The New York averages held up best as the SPY was flat and the Dow rose .20%. Nasd averages were weakest due to tech stocks, mostly AAPL. The COMPQ fell .30% to lead the way down. The decline in volume meant there was no distribution. Leading stocks were also about flat on the day with the leaders index up only .13% on lower and well below average volume. The index continues to trade sideways in a tight range right around the 9dma. The action so far has been constructive as leaders have been consolidation for almost two weeks and allowed important moving averages to catch up. The major averages and the leaders index are holding their 10dma’s and 9dma respectively and as long as they do this without breaking down little to no real damage is being done. A couple of items, besides the high distribution count, are worrisome. The % E’s are at 4.2% of the total and were 3.7% on Thursday. This is a very low level that has been associated with pull backs in the past. Also the Investors Intelligence numbers are at 61.6% bulls and 15.2% bears. I have been following this indicator for over twenty years and can’t remember it being at such extreme levels. These are not exact timing tools but they let us know we are very late in the game and a correction could begin at any time. Jerry