Leaders Index 12-16-14

The market opened lower today and it looked like we would have a continuation of yesterday’s weakness. In less than a hour the major averages turned around and staged a nice rally in what looked like a positive reversal. It didn’t last long. The market topped out after about two hours of trading and went into a hard selloff that lasted for the rest of the session.The COMPQ led the way down with a decline of 1.24% while the SPY fell .85%. The major averages all closed at their intraday lows in a real sign of weakness. Volume was higher across the board, showing that large institutional players were unloading stock. The New York averages broke below their 50dma’s, joining the Nasd averages below this important moving average. Leading stocks acted pretty poorly as well with the leaders index declining 1.02% on heavier and just below average volume. This showed distribution on quality growth stocks as well. The index closed near it’s intraday lows and is now below it’s 50dma, which usually means the chart of a leading stock is broken. The market is acting poorly and it looks like we are headed for a correction. This has happened many times before, most recently this past October. It is dangerous to be short right now because of the recent tendency of the market to reverse higher after it looks like there will finally be a real correction. Until there is more clarity about where the market is going the sidelines is the best place to be. Jerry