Leaders Index 9-7-18

The market put in another overall disappointing session yesterday. The major averages all spent the session working their way lower and finishing near their lows of the day, not a positive sign. The COMPQ was off by .25% while the SPX lost .22%. Volume was lower across the board so there was no new distribution on any of the major averages. Leading stocks started off pretty strong but they lost most of those gains by the end of the day. The leaders index ended the session higher by .15%. This was however near the lows of its trading range, a sign of a lack of support. The index closed just above its important 17dma, but again traded below it for the third session in a row. Volume on the index was lower but still well above average. The action of the market last week has to be considered negative. The Nasd averages and leading stocks were actually doing pretty well yesterday until more talk of tariffs came out of Washington and the market sold off. We may be at an inflection point right now where the market could go in either direction. Not enough damage has been done to say the rally is over and we are in something of a correction, but there are some serious warning signs out there. There have been more new lows than new highs for the last three days. There were four Hindenburg Omen signals last week, one every trading day of the week. This type of cluster is negative. We have seen several days last week where the major averages closed near their lows of the day. Leading stocks, after leading the market higher are starting to show some cracks. The last three trading days saw the leaders index close weak on strong and above average volume. The leaders index is now dancing with its important 17dma. It has tagged it in the last three sessions, if this continues a break of this important support level is likely. That would be a very negative sign as the best leaders rise above this important moving average. The distribution count is elevated and we also saw a cluster of distribution days, a very negative sign. As I said it looks like we are at something of an inflection point. There are a lot of warning signs out there. We must see some strength in the market and in quality growth stocks next week, or the market may turn down. Jerry