Leaders Index 11-16-18

The market put in an a pretty wild week while I was away. The decline continued and all the major averages lost ground. There was some rebound action on Thursday and Friday but it was not particularly impressive. Yesterday’s action was labored as the major averages tried a couple of times to stage solid rallies and failed. The Nasd averages were slightly lower while the New York averages were a bit higher. Volume yesterday was mixed, higher on the New York and lower on the Nasd. All the major averages closed high in their intraday trading ranges. Leading stocks are acting better than the overall market with the leaders index a bit higher yesterday The index sold off from its highs after the follow through, but it did so on lower volume. The index remains above its important 17dma and this is a critical support level that must be held. It is hard to say that the follow through that occurred right after the election hasn’t failed, or at least is on very shaky ground. There was a distribution day two days after the follow through, which is usually fatal to any follow through. The major averages also quickly closed below the lows of the follow through day, which takes you back to a full cash position in the market school model. In addition few breakouts are producing any kind of meaningful gains, which is the real final arbitrator of the success of a rally. The NYSE Composite and the small and mid-cap stock joined the semiconductor stocks in death cross territory. The follow through isn’t officially dead until it takes out the low of the rally day on 10/29, but if the fat lady hasn’t sung yet she is certainly clearing her throat. With earning season winding down about the only thing I can see right now that would cause any kind of meaningful rally would be a trade deal with China at the G20 meeting later this month. In order to improve the picture the major averages will have to overcome their 200dma resistance levels with real volume behind them. Right now there isn’t that much to get excited about in the current rally attempt. Jerry