Leaders Index 8-5-14

The market had another rough day today. The major averages opened lower and were down the entire session. All of yesterday’s gains were wiped out and then some. The New York averages were the hardest hit with the SPY losing .97% while the COMPQ was off by .71%. Small caps held up best for a change with the RUT lower by .29%. Volume was higher across the board so there was distribution on all the major averages. This shows that institutional players are becoming more negative on the market as the high volume is on down days. The closes were in the lower half of their intraday ranges and the COMPQ, which climbed back above it’s 50dma yesterday fell back below it. This is very negative. When an index regains an important moving average and can’t hold it lower prices are usually ahead. Leading stocks were hit as well but not as hard as the overall market. The leaders index fell .60% on slightly lower volume than yesterday. It too closed in the lower half of it’s intraday range. Quality stocks are struggling as two buyable gap up breakouts, AKRX and CAR, ran into trouble after early strength. All the major averages, as well as the leaders index, are beginning to live below their 50dma’s. Small caps are well beneath their 200dma’s. Based on the action of income oriented securities that I follow, such as REITs, MLP’s and bank loans it looks like the market is beginning to price in higher interest rates. We are in the early phases of this action and the Fed could certainly turn it around, but this can’t be good for the stock market either. Jerry