Leaders Index 2-27-15

The market sold off yesterday in what was the first really negative session in the last couple of weeks. The major averages opened lower and were in negative territory most of the day. The COMPQ was lower by .49% while the SPX declined .30%. All the major averages finished at or near their intraday lows in a reversal of what we have seen lately. Volume was higher across the board so there was distribution on all the major averages. This is the first distribution day in a while and since several dropped off in the last week the total distribution count is fairly low and not a problem for the market yet. Leading stocks had a negative session as well. The latest leaders index is almost two months old now and a few stocks in it were broken. Since the market is moving to new highs I thought it would be a good idea to replace a few of the components of the index. There are four new members. The fact that after two months only four components were broken shows that quality growth stocks are doing pretty well. Out are BABA,RH,SWIR and TASR. Replacing them are CYBR, LCI, AKRX and IPGP. I think that these additions will help the index better perform it’s primary function of telling us when the market is getting into real trouble. The new index is not that different from the last one. The main difference is the relative strength line. It made a new high Thursday while the last on had not moved into new high ground. The index lost 1.21% yesterday on flat but above average volume. It is trading above all it’s important short term moving averages and looks like it is in good shape. The rally seems to be on solid ground right now with both the major averages and leading stocks generally doing all right. The long side of the market is the place to be, but keep one eye on the exits if things weaken quickly. Jerry