Leaders Index 3-22-18

The market sold off hard today, seemingly on news of a possible trade war with China and changes in Trump’s legal team. The major averages opened lower and continued down from there. The COMPQ was lower by 2.43% while the SPX declined 2.52%. All the major averages closed at their intraday trading lows, a sign that there was no buying interest as prices fell. Volume was higher across the board and at or above average on both exchanges. This showed that large institutional players were selling stocks and produced fresh distribution on all the major averages. Leading stocks were hit today as well with the leaders index falling 2.87% on the session. The index closed near its low of the day and broke below the important 17dma support level. Volume was lower on the day, so there was no distribution in quality growth stocks. The market got hit hard today on heavy volume. There is now a very heavy level of distribution, an amount associated with the end of rallies or rally attempts. The Nasd averages broke below their critical 50dma support levels today, joining the New York averages below this now resistance level. We could see a bounce here after such a big sell off, but the move of the Nasd averages into new high ground on 3/9 after the strong employment report has clearly failed. The major averages have not undercut the lows of the follow through on 2/14, but it is difficult to make the case that this FTD has not failed. With the market reacting to news stories the way it has been recently it is hard to predict where it will go, but the evidence certainly favors lower prices ahead. Jerry