Leaders Index 11-2-18

[Jerry Samet]

The market started off higher yesterday on a strong employment report, but the gains didn’t hold. In less than a half hour of trading the major averages topped out and started selling off. Some late strength saw the major averages finish off their lows. The Nasd averages were the weakest with the COMPQ and the NDX lower by 1.04% and 1.47% respectively. The SPX was off by .63%. All the major averages closed I the lower half of their intraday trading ranges, generally a negative sign. Volume was mixed, higher on the Nasd and lower on the New York. This showed some distribution in Nasd stocks. Leading stocks were lower as well. The new leaders index held up better with a decline of .31% and a close in the upper half of its trading range. Volume was lower and slightly above average. The older index was lower, which contains more tech stocks, was lower by 1.57% and closed low in its intraday trading range. Volume was much higher, showing heavy selling in these stocks. The market tried to continue last week’s rally early on after a strong jobs report, but couldn’t hold on. Selling came in and drove prices to significant losses before some buying came in and allowed the market to close off its lows. After three days of strong action some weakness is not that unexpected, but we are still waiting for a possible follow through. Two of the shorter term indicators I look at, the A’s minus E’s and the Summation Index both went positive last week, so that would point to a continuation of higher prices, at least in the very short term. The election is on Tuesday and we will have to wait to see how it turns out and how the market reacts to it. Right now taking new positions is a crap shoot and it is better to wait until after the election. We also must see if there is going to be a follow through and if it is well confirmed or not. Jerry