Leaders Index 5-9-14

The market was volatile again yesterday. The major averages bounced around between positive and negative territory all day before late strength allowed them to close near their intraday highs. The COMPQ led the way up with a gain of .50% while the SPY was higher by .20%. Volume was down considerably across the board. Leading stocks did not follow the overall market higher. The leaders index was slightly lower on the day, declining .18% on lower and below average volume. The index traded below the lower trend line on the chart before closing above it. The index is now clearly living below it’s 50dma, which has now turned down. Both the 9dma and the 17dma are now also below the 50dma. The chart of the leaders index is looking worse by the day. The relative strength line on the index is at new lows and the index is threatening to break below it’s lower trend line. The market seems to be showing some signs of an important top. There is clear bifurcation right now as only the New York averages are holding up. The reason for this seems to be that institutional players are moving into defensive names that are mostly traded on the new York exchange. The Nasd averages are doing poorly and the small caps, as measured by the RUT are doing even worse. Even the energy sector, which was the only area doing all right is showing signs of stress. I see little reason to be in the market right now and until a trend develops in one direction or the other participating in this market is very dangerous. Jerry