Leaders Index 8-1-19

The market suffered a real negative reversal today. The major averages opened higher and rallied to strong gains. It looked like the declines of yesterday would be wiped out. The news came out that the trade talks in China earlier this week did not go well and Trump imposed new tariffs on Chinese imports. The market immediately started selling off and was weak into the close. The New York averages were hit the hardest as more companies on this exchange are involved in trade. The SPX fell .90% while the COMPQ and the NDX fell .77% and .61% respectively. All the major averages finished low in their intraday trading ranges. This showed there was little buying interest as prices fell. Volume was again key. It was higher across the board. This produced another distribution day on all the major averages. Leading stocks were mostly lower as well, but the leaders index again bucked the trend. It was higher by .94% on the session. This was due to gains of 5.50% in CHDN and 6.93% in ENPH. The rest of the components of the index still held up fairly well. The index still closed low in its trading range and volume was lower but still well above average. The market was hit by another news event today. The early gains were strong and it looked like we would regain all or most of yesterday’s losses. The news of new tariffs really killed the market as we closed with meaningful losses. Volume was again a problem as it was higher on both exchanges, showing that large institutional players were indeed selling stocks. The level of distribution has now gotten to worrisome levels and we are close to a distribution cluster. The last few days have also seen so noticeable distribution in individual stocks. The action of the market in the last couple of days has produced some red flags. The employment report comes out before the open tomorrow and that will set the tone for trading, at least early. A health amount of caution is warranted right now. Jerry