Jerry Samet
11-29-2017, 06:47 PM
It was an ugly session today. After opening lower the major averages sold off for the rest of the day. There was real weakness in tech and other leading stocks, producing large losses in the Nasd averages. The COMPQ and the NDX were lower by 1.27% and 1.74% respectively. The New York averages held up better as financial stocks were strong. The SPX was lower by .04% while the DOW and the NYA were higher. All the major averages closed low in their intraday trading ranges as there was little buying interest as prices fell. Volume was higher across the board and well above average on both exchanges. This shows that large institutional players were selling stocks. It was also enough to produce a new distribution day on the Nasd averages. The decline in the New York averages was too small to qualify. Leading stocks were hit hard. The leaders index was lower by 4.0% and finished low in its trading range. The index blew through its important 17dma support level and volume was the highest it has been on the entire chart. This shows that there was very strong selling in leading growth stocks. The relative strength line of the index is also approaching its 50dma. Today’s action was very negative. There was significant damage done overall and particularly to leading growth stocks. Most sold off hard and broke important support levels on heavy volume. The leaders index breaking its 17dma is a big red flag. The Nasd averages took big hits and the semiconductor stocks, that have been the sector with the greatest strength, were hit very hard. When leaders take hits like this it can lead to a reversal in trend. There is strength now in financials and more value oriented stocks. This type of action can lead to either a rotation into new leadership or an overall correction in the market. One day’s trading is too soon to make any real judgement, but a couple of more days like this may change that. We need to see a real rebound fast in the tech and growth stocks or we could be in for either a rotation or a meaningful correction. The type of action we saw today is dangerous and in the past has often signaled a change in trend. The next few days will tell us a lot. Jerry