Jerry Samet
06-10-2017, 12:14 PM
The market opened strong yesterday, but it didn’t last. After a little more than an hour of trading the major averages reversed and began a serious selloff. The real damage was done in the stocks and sectors that have been the leaders for a long time. The New York averages held up reasonably well while the Nasd averages were hit pretty hard. The COMPQ and the NDX were off by 1.80% and 2.44% respectively while the SPX was flat with a decline of only .08%. The Nasd averages closed low in their intraday trading ranges while the New York averages finished in about the middle of its trading range. Volume was higher across the board and above average on the Nasd. This was enough to produce a fresh distribution day on the Nasd averages, while the fall in the SPX was too small to produce distribution. Leading stocks were hit hard with the leaders index losing 2.69% on the session on massive volume. After making a new high early it reversed and sold off hard. The big red candle on the chart is a big warning. The index closed in the lower half of its trading range, showing that there was not much buying interest as prices fell. The best thing you can say about the leaders index yesterday id that it closed off its lows and it held the short term 9dma. The leading stocks and sectors were hit hard yesterday in a worrisome reversal. There were losses almost across the board in the big cap tech stocks and the semiconductor stocks, which have been the strongest and took the biggest hits. The New York stocks, which have been lagging held up well and the small and mid-cap stocks advanced, although they closed low in their trading ranges. The kind of reversal we saw yesterday in which the leaders took the brunt of it can be dangerous. These reversals many times lead to a change of trend. The market and particularly the hardest hit stocks and sectors must rebound strongly, as they have done in the past, or the rally could be in trouble. Jerry