Leaders Index 3-14-14

The market made a feeble rally attempt early Friday, but couldn’t hold those small gains. After a couple of hours of back and forth trading the major averages began a decline that took them into the end of the session. They all closed at their intraday lows with the COMPQ leading the way by declining .35% while the SPY was off by .28%. The mid and small cap stocks did a little better by closing with small gains, but overall it was an uninspiring session. The major averages remain below all their short term moving averages. Leading stocks did a little better than the overall market with the leaders index rising .51% on much lower and below average volume. The index set an early new intraday low and again closed below the important 17dma. This is the fourth session in a row below this moving average and the index is beginning to live below this support level. When there is a sell off it is important to look at the quality of the bounce after it. Friday saw no bounce at all, which is a very negative sign. The market has had a pattern of small five or six percent corrections followed by rallies back to new highs for the move over the past year. It is very possible that it will follow this pattern again with a QE floor under the market, but one of these days that floor will break and there will be a more serious decline. It is impossible to know when that will happen, but for right now a more defensive posture is probably a good idea. Jerry