Leaders Index 4-6-18

The market got slammed pretty good yesterday. The major averages opened sharply lower on news that tariffs may be expanded on China and talk by Powell on interest rate hikes. The major averages worked their way lower the rest of the session until a little late buying say them finish just off their lows. The COMPQ declined 2.28% while the SPX lost 2.19%. All the major averages closed just above their intraday trading lows, showing that there was little buying interest as prices fell. Volume was higher across the board as large institutional players were dumping stocks. Leading stocks were lower as well with the leaders index declining 2.32% on the day. The index closed near the bottom of its trading range and is back right at its critical 50dma support level. Volume on the index was lower and well below average. This shows that selling pressure in quality growth stocks was less than in the overall market. The volatility continued yesterday with the market giving back almost all the gains it made in the three rally days last week. I said that it looked like a wedging rally as all three up days were on successively lower volume. That changed yesterday as the market sold off on higher volume. It continued the pattern of higher volume on down days and lower volume on rally days. This is a pattern of distribution and shows that large institutional players are selling stocks and reducing their exposure to the market. The leaders index is sitting right on its 50dma and a clear break of this important moving average would be very negative. The NYA, the broadest measure of New York stocks, fell back below its 200dma which is a very negative sign. Overall it market continues to look weak. It moves back and forth based on news stories, but the greatest pressure is on the down days, not the up days. Unless you have a very short time frame it is very difficult to make any progress so the best thing to do right now is watch from the sidelines. Jerry