Leaders Index 4-4-16

The market had a solid rally last week starting Tuesday after Janet Yellen gave a very dovish statement indicating that rate hikes would be less than expected and that the world economy would be a factor in future rate hike decisions. The major averages rallied for the rest of the week and made it into new high ground for the move. Today the market sold off in a fairly orderly fashion. The major averages opened lower and were down most of the session and they all closed at or near their intraday trading lows. Volume was lower today than on Friday so there was no distribution on any of the major averages. Leading stocks were mixed to mostly lower as the leaders index fell .83% on the day and only twelve components of the IBD 50 were higher today. Volume on the leaders index was up quite a bit today and was well above average, so this counts as distribution on the leaders index. Much of this volume increase was due two components of the index that just about canceled each other out on a price basis. EW and a buyable gap up and finished higher by 16.86% while SWHC broke down by 17.94%. The index has trended lower for the last four trading sessions and again tagged it’s important 17dma support level. If it breaks below this support it will be a sign of real weakness. It appears that the central banks want to continue to support the market and positive pronouncements can still move the markets higher. The charts of the major averages are looking ok and the rally is intact. Leading stocks are struggling more as can be seen in the relative strength line of the leaders index against the SPX. We are seeing a few quality growth stocks acting better, but they are still more the exception rather than the rule. Jerry