Leaders Index 12-14-18

The market sold off hard again yesterday. After opening lower the major averages sold off for most of the session. They all finished at or very near their intraday trading lows, a clear sign of a lack of support. No one stepped in to buy as prices fell. The Nasd averages were the weakest with the COMPQ and the NDX dropping 2.26% and 2.56% respectively. The SPX was off by 1.91%. Volume was higher across the board, showing that large institutional players were selling stocks. It also added a fresh distribution day to all the major averages. Leading stocks were weaker as well with the leaders index falling 1.88% on the session. It closed near the low of its trading range and although it tagged its important 17dma at its highs it was unable to overcome this resistance level. Volume was higher as well, showing that there was distribution in quality growth stocks as well as the overall market. The market is acting very poorly. The large intraday swings and weak closes are telltale signs of a market that wants to go lower. The recent follow through is not technically dead yet, but it is very difficult to make the argument that it has not failed. We have now had two follow through days that have quickly failed. This is the type of action you see in a bear market, where the majority of follow through days fail. The fact that both were poorly confirmed by the three indicators we use to confirm follow through days reinforces the usefulness of this method. The COMPQ has now had a decline of 16% from intraday peak to intraday low, close to the 20% level that usually officially marks a bear market. In addition to this the fact is that stocks are not working. There is little reason to be playing around with positions right now. Jerry