Leaders Index 1-2-15

The first trading day of 2015 turned out to be a pretty negative session. The major averages opened with strong gains and it looked like we would have a solid advance. The market topped out in the first half hour and went into a nasty decline. At it’s worst the major averages were down close to one percent. Some late strength erased much of the losses and the New York averages closed about flat while the Nasd averages still ended the session lower. The COMPQ was off by .20% while the SPY was lower by only .03%. Volume was generally light and mixed. IBD said volume was higher on the New York but lower on the Nasd. This would have produced no distribution. Esignal showed the reverse, higher volume on the Nasd and lower on the New York, which would have produced a distribution day on the COMPQ. I’m not sure who is right but esignal is rarely wrong on these matters. Leading stocks were lower on the day as well with the leaders index declining .26% on heavier but still below average volume. The index tagged it’s important 17dma during the session but finished above it and in the upper half of it’s intraday trading range. The relative strength line of the index declined slightly. Quality growth stocks are not acting well. The few that do break out are not producing solid gains. Most go up a little than quickly roll over. If you are buying stocks now, even if you get one of the few that produce a gain you are likely to get two of three others that produce small losses and you will be lucky to break even. I have always said that the time to be in the market is when it is easy to make money. It is very difficult now and a good degree of caution is a good idea. Jerry