Leaders Index 10-5-18

The market took another hit yesterday. The major averages sold off most of the session until a little late buying saw them close off their lows. The Nasd averages again took the worst of it with the COMPQ and the NDX off by 1.16% and 1.21% respectively. The SPX was lower by .55%. All the major averages finished low in their intraday trading ranges, a negative sign. Volume was lower across the board, showing that the selling intensity was lower than Thursday, but that is about the only good thing you can say about yesterday’s action. Leading stocks were hit hard again, with the leaders index losing .74%. The index closed is the upper half of its trading range, but still moved further below its 50dma. Volume on the leaders index was higher, showing distribution in quality growth stocks. The market looks pretty bad right now. The Nasd averages are below their important 50dma’s while the New York averages are holding slightly above this critical moving averages. The secondary averages look even worse. The small and mid-cap averages are just above their 200dma’s while the semiconductor index is below even this long term moving average. New lows are swamping new highs and the distribution count is very high. The most negative item is the action in leading stocks. For a while they were outperforming the overall market and I said many times that it was the best thing the market had going for it. That changed a couple of weeks ago and has gotten worse in the last week or so. The bottom line in any market is the action of the individual leading stocks. Recent quality breakouts have been failing for almost two weeks now and the major averages are now following suit. The spike in interest rates has much to do with the decline and there have been many times in the last couple of years when the market looked like it would roll over only to rally back. That may happen again, particularly if earnings season is very strong, but this time there are more negatives. Right now protecting your capital should be the top priority and watching how the market reacts to earnings. Jerry