Leaders Index 10-2-14

The market opened weaker today and a real decline was developing that looked like it would deepen a possible correction. The major averages had a reversal a couple of hours into the trading session and regained their losses. After producing some gains some late weakness caused the major averages to finish about flat on the day. Volume was above average but still lower than yesterday’s decline across the board. The COMPQ was up .18% while the SPY was completely flat. Both closed at or near their intraday highs but still remain well below their 50dma’s. Leading stocks also recovered early weakness with the leaders index lower by only .01%. The index traded below it’s 50dma during the day but regained this important moving average. The index closed near the top of it’s intraday range and volume, while above average was still lower and on yesterday’s big decline. The 9dma also broke below the 17dma. Today’s action would qualify as a high volume reversal and this type of action can lead to higher prices, but today’s trading didn’t have the feel of a powerful move. Volume, while higher than average was lower than on the previous day’s decline. Also the major averages were able to recover their losses but did not have the kind of strong gains you would like to see on a reversal. The critical thing to watch now is can the major averages rally back to their 50dma’s and break above them with conviction. Until that happens the weight of the evidence still points to further weakness. Jerry