Leaders Index 4-11-14

After such a big sell off on Thursday you would expect to see a nice bounce if the rally were to remain intact. This didn’t happen yesterday. Instead of a high quality bounce the market continued lower. The COMPQ again led the way down with a loss of 1.34% while the SPY was lower by .95%. Volume was lower across the board but still above average on the Nasd. The major averages continued to sink lower below their respective 50dma’s Leading stocks got hit again also with the leaders index falling 1.31% on heavier and above average volume. After falling below it’s important 17dma earlier in the week the index rallied back to this moving average but was unable to get back above it. This is a very negative sign. The index tagged it’s 50dma during the trading session but closed just above it. The fact that it finished in the lower half of it’s intraday range showed there was not much buying interest in these stocks by large players. I have been saying all week that the eight percent down level in the major averages is a critical support level. Yesterday the COMPQ broke below this level and is now down nine percent from it’s highs. The New York averages still have a way to go but will likely reach or exceed this level also. It looks like we will see the first real intermediate term correction in over a year. If we exceed the twelve percent down level on the COMPQ or the other major averages we will likely see a major correction or even a bear market. This would actually be a good thing as it would clear out the system and set the stage for a new cycle, which would be great. Jerry