Leaders Index 10-27-15

After some recent strength the major averages are holding up fairly well. All the major averages were lower today, but the losses were fairly contained. The SPX fell .26% while the COMPQ was off by .09%. Both finished high in their intraday trading ranges, which is positive, and volume was higher across the board. This produced distribution on the new York averages while the Nasd averages lost to little to qualify. Leading stocks were weaker than the overall market with the leaders index dropping 1.45% on higher and above average volume. The index did close high in it’s intraday range, but the relative strength line continued to weaken. It fell below it’s 50dma line. The index itself, after bouncing around it’s 17dma for a few days finally broke decisively below this important support level. More and more components of the index are breaking down, which is a warning sign in itself. The action continues to be concentrated in a small number of mega cap stocks, with a heavy emphasis on technology. Small and mid cap issues are lagging badly. The generals are still running but the soldiers are not following. A couple of big gains last Thursday and Friday were caused by some good earnings reports, mostly from big tech stocks, and word from Europe and China that more stimulus is on the way. There are a lot of divergences out there that are reason for caution. The SPX, after breaking above it’s 200dma is now pulling back to this now support level. It would be very negative if it did not hold. It is tough to make much progress now and one should not get to aggressive. Jerry