Leaders Index 12-28-16

The market sold off today and more than wiped out yesterday’s gains. After a slight increase in the first five minutes the major averages started selling off and declined for the rest of the day. The losses were across the board with the COMPQ falling .89% while the SPX lost .84%. The biggest hit came in the semiconductors as the SOX declined 1.93% and shows a sharp intraday reversal and possible a sell signal on the group. All the major averages finished the session at their intraday trading lows, showing that there was little support as prices fell. Volume was higher across the board, but still below average. Low volume is to be expected this time of year, but it was still enough to produce a fresh distribution day on all the major averages. Leading stocks were lower as well with the leaders index falling 1.96% and closing at the bottom of its trading range. The index is sitting right on its short term 9dma and 17dma. Volume on the index was very high, showing distribution in quality growth stocks. Much of the increase in volume came from NVDA ,which had a high volume reversal today after making new highs early. This occurred after it broke above an upper channel line yesterday and produced more sell signals today. NVDA is perhaps the best stock of 2016 and its apparent topping out has some possible implications for the overall market. Big moves are not unusual in the thin trading period we are in now so you have to be careful about putting too much weight on one day’s action. The leaders index must hold its short term moving averages and the major averages should also. Jerry