Leaders Index 7-11-14

It was a fairly quiet summer Friday yesterday with the major averages finishing little changed. The COMPQ was the strongest of the major averages with a gain of .44% while the SPY was higher by .15%. The small caps were lower on the day as the RUT fell .17%. Volume was lower across the board, as would be expected on a Friday in the summer. This past week was the worst in a long time as distribution days and breakout failures among quality stocks were all over the place. Leading stocks performed better on the session as the leaders index rose 1.09% on slightly higher but still below average volume. The index closed back above it’s important 17dma, which is good. During the entire course of this rally there were a solid number of quality stocks breaking out of good chart patterns with good fundamentals. The problem is that few if any of these stocks followed through on these breakouts and produced worth while gains. The majority of those stocks have broken down this week and most of the small gains that these stocks were able to achieve were wiped out. Late cycle rallies should always be treated with caution and expectations should be modest. It is impossible to tell if the market will roll over here into a real correction or turn around and start higher again. Recent action makes it hard to get to excited about the market right now and having a good sized cash position is probably a good idea. Jerry