Leaders Index 12-10-14

The market got slammed pretty hard today. It opened lower and continued down the entire session. All the major averages took hits but the COMPQ led the way lower with a decline of 1.73% while the SPY declined by 1.64%. Both closed at their intraday lows, showing that there was selling into the close. Volume was mixed, lower on the Nasd and higher on the New York. This produced distribution on the New York averages. Leading stocks were hard hit as well with the leaders index dropping 1.90%. it also closed at it’s intraday lows and is now back below it’s 9 and 17dma’s. Volume on the index was slightly lower than yesterday and below average.This shows that there was not as much institutional selling as would be expected considering the size of the price decline. Yesterday was a good looking reversal day. The fact that the overall market and quality growth stocks could not build on the reversal is itself a negative sign. Today was close but it appears we had another Hindenburg Omen signal today. Combined with the one yesterday we have now had seven signals in the last eight trading sessions. If the weakness continues we may not see another for a while as the NYA is now only slightly above it’s level 50 days ago, a requirement for a signal. This is a big cluster of signals and there has not been one like this since 2007. In fact the current market is starting to look more and more like 2007, which does not bode well for future prices. The market has looked like it was going to go into a serious decline many times in the last couple of years only to turn around and rally again. This may happen again, but for now a reduced exposure to the market is a good idea. Jerry