Leaders Index 7-16

[Jerry Samet]

The market declined today as the major averages broke a string of gains. The decline was moderate for the major averages with the fall ranging from .25% on the COMPQ to .37% on the SPY. Volume was higher across the board but was below average. This was enough to produce a distribution day across the board, the first since the FTD last Thursday. The loss was moderate in terms of the recent advance. The same cannot be said for leading stocks. They were hit much harder than the overall market. The leaders index declined 3.43% on much higher and above average volume. The big red candle really stands out. While two stocks in the index, TSLA and STMP took very large hits, the losses were widespread. Of the 22 stocks in the index 17 declined one point or more, many in high volume. This is a much bigger hit than you want to see early in a rally attempt. The index held it’s 10dma, which is positive. You can’t expect the market to advance every day and the sell off today in the major averages was not that bad, although it would have been better if it had not occurred on higher volume. The decline in leading stocks is more worrisome. It was a significant hit on very high volume that was wide spread. The fact that it held support at the 10dma is a good sign. The rally remains intact, but today’s action is a warning sign. Jerry