Leaders Index 7-31-19

The market had a wild ride today, courtesy of Powell and the Fed. Things were pretty quiet going into the Fed report as the major averages were little changed. Even the announcement of the expected quarter point rate cut didn’t do much. Then in the news conference Powell said that this might not be the beginning of an easing cycle and the market tanked. The selling got very strong and while the major averages finished off their worst levels the losses were substantial. All the major averages finished near the bottom of their intraday trading ranges, a sign of weakness. The declines were wide spread. The COMPQ and the NDX lost 1.19% and 1.30% respectively. The SPX fell 1.09%. Volume was higher across the board, adding a distribution day to all the major averages. Leading stocks were also weak. The leaders index ended with a gain of 2.48% on very heavy volume. The components of the index held up fairly well, but ENPH gapped up 30.02% on massive volume following a well-received earnings report. This large a move in a single component can distort the index a bit, but there are a couple of stocks in the index that have pretty big one day declines. It is more fun when they gap up. This breaks the index out of the consolidation they have been in. The market took a serious hit today. The action was news driven and moves on Fed announcements are often reversed in the following day or two. Either way there was some damage done today. There was a new distribution day on all the major averages and the number on the SPX is getting high. The market was expecting a series of rate cuts from the Fed and Powell threw some cold water on that idea. The chart of the leaders index now looks good although the charts of the major averages got large red candles today. One day’s action, particularly when it is news driven, doesn’t change the overall picture, but it would make me feel better if today’s action is quickly reversed. Jerry