Jerry Samet
03-14-2018, 06:54 PM
The market repeated yesterday’s pattern. It opened with some strength, but it didn’t last long. The highs of the day were made in the first five minutes of trading and it was mostly downhill from there. This is not a particularly healthy pattern. The New York averages were the weakest today with the SPX declining .57% and the Dow off by 1.00%. The COMPQ declined .19% while the NDX lost only .08%. All the major averages closed low in their intraday trading ranges, a sign of lack of support. Volume was mixed on the day. It was lower on the Nasd and higher on the New York. This was enough to produce a fresh distribution day on the New York averages. Leading stocks outperformed the overall market again with the leaders index gaining .88% on the session. The index closed in the upper half of its intraday trading range. It bounced off its short term 9dma support level and closed well above this moving average. For the last three days the leaders index has been consolidating its recent advance in a pretty constructive manner. It is allowing its important moving averages to catch up. The relative strength line of the index made a new high. Volume was also higher, just what you want to see on an up day. The market is throwing off some mixed signals right now. The fact that quality growth stocks are acting generally well and outperforming the major averages is good. It is very unusual for there to be an important market top when these canslim style stocks are acting well. On the other hand the charts of the major averages, particularly the New York averages, are showing some stress. The SPX broke nicely back above its 50dma bit has now come back and is sitting right on it. A break of this important moving average and support level would be very negative. If you look at the chart of the NYA you will see that it broke below its 50dma on 2/5 and has since made three unsuccessful attempts to rally above this now resistance level. The charts of the Nasd averages look better. There is limited evidence right now that the current rally attempt is rolling over, but positions should be taken with a lot of caution. Jerry