Leaders Index 3-6-15

The market took a real hit yesterday. The pull back of the last three days after the recent advance was pretty orderly, until yesterday’s action. After the stronger than expected employment report raised fears of a Fed rate increase later this year caused the futures to sell off. The major averages opened lower and were in negative territory all day. The COMPQ was off by 1.11% while the SPX declined by 1.42%. Late weakness saw all of the major averages close near their intraday lows, a sign of weakness. The short term moving averages that had been support were broken. Volume was higher across the board, showing that large institutional players were selling stocks. This produced distribution on all the major averages. One of the real supports for the rally has been the low distribution count. This is changing as the count is building. Leading stocks took a hit as well with the leaders index falling 1.74% on about flat and average volume. The index also closed near it’s intraday trading low. Many high quality growth stocks had serious declines and breakouts failures are starting to show up more. It is a reminder that in a weak late cycle rally that we have been seeing gains that take weeks to accumulate can disappear in a day or two. Much of the decline was attributed to fears that the Fed would raise rates due to the employment report released yesterday. It makes you wonder what will happen when they really do start raising interest rates. Yesterday’s action was a real shot across the bow. If the major averages and leading stocks can’t rally back quickly and with some real conviction the rally will be in real trouble. Jerry