Leaders Index 1-9-15

The market reversed the last two days action yesterday by having a pretty good decline. Last week saw two big declines on Monday and Tuesday followed by two large advances on Wednesday and Thursday and a big decline on Friday. Some say the decline yesterday was a result of what was happening in France, but the market rallied hard(even producing follow through like action) on Wednesday when the initial attack occurred. The market sold off early and all the major averages had one percent plus losses at the worst. Some late strength allowed the major averages to close off their intraday lows but they still closed in the lower half of their trading ranges. The New York averages were weakest with the SPY declining .84% while the COMPQ fell .68%. Both these major averages are now sitting on their important 50dma’s. Volume was lower across the board, so there was not that much selling pressure from large institutional players and thus no distribution on the day. Leading stocks acted generally pretty well yesterday and there were a couple of fresh breakouts in stocks like NXPI. Since IBD called a new rally I made some changes to the leaders index. It is not a completely new index but I took out five names that were lagging the others and put in five new ones that were doing better. The ones that were removed are MTSI,ALXN,VDSI, CBG and PKG. The new additions are FSL,AMBA,VRX,ACT and CMG. The revised index declined .24% yesterday on lower and below average volume. The index is in new high ground on both a price and a relative strength basis. We will have to see if this rally attempt works out any better than the recent ones. Big gainers have been rare for a long time now. Entry into the market now should be done with caution and position sizing should probably be less than normal. Jerry