Leaders Index 10-2-20

The market had a bit of a rough session yesterday. The major averages opened lower and mostly couldn’t do anything the rest of the day. The Nasd averages were the weakest with the COMPQ and the NDX falling 2.22% and 2.83% respectively. The New York averages held up better as the SPX declined a lesser .96%. The Nasd averages finished close to the bottom of their intraday trading ranges while the New York averages closed just above the midpoint of their trading ranges. Volume was lower across the board. It fell 8.05% on the Nasd and 4.08% on the New York. This means that all the major averages avoided distribution. Leading stocks were lower as well with the leaders index declining 1.99% on the session. It closed near the bottom of its trading range but held all its short term moving averages. Volume was higher but below average. This shows distribution in quality growth stocks. The market was weak yesterday. It looked for most of the day like there would be distribution, but volume fell off late and it was avoided. It did however feel a lot like a distribution day even though it officially wasn’t one. That is lucky for the rally attempt as distribution so close to a follow through usually kills it. The market is acting a little hinky fight now, partially due to all the uncertainty out there right now. The follow through is a little suspect as it occurred on an average that is usually not used for that purpose. Also the market is going up and down on news of a new stimulus deal that may or may not get done. Also Trump getting infected and going into the hospital so close to the election has caused a lot of uncertainty. The NDX and the SPX both fell back below their 50 day moving averages yesterday while the COMPQ is sitting right on this important moving average. We will likely see a lot of volatility between now and the election, and beyond if it is contested. I know this is technically a rally attempt, but I would be careful. It looks pretty weak so far and one bad news story could end it. Sticking your foot in the water right now is ok, but I wouldn’t jump right in. Jerry