Jerry Samet
09-13-2014, 11:25 AM
It was a pretty ugly day yesterday. The market opened lower and it was all down hill from there. The major averages finished near their intraday lows, a sign of weakness. The declines were about equal with the COMPQ down .53% and the SPY off by .60%. Volume was higher across the board so there was distribution on all the major averages. There are now three distribution day on the major averages. The Nasd averages are holding up better as their charts still show a fairly tight consolidation pattern. The New York averages look weakest as the NYA is now below it’s critical 50dma while the SPY is fractionally above this moving average. Leading stocks were generally weaker as well but held up a little better than the overall market. The leaders index declined by .31% on lower and below average volume. The index seems to be working it’s way lower and is still just below it’s important 17dma. This moving average has been a resistance level for the last four days since the index first broke below it. If the leaders index can’t get back above this moving average with some conviction it will be a big negative for the rally. The red flags are getting bigger now. Both the major averages and quality growth stocks are showing signs of stress and distribution days are building. We need a strong rally with heavy volume quickly to show that large institutional players are supporting the market. If this doesn’t come the rally will be on very shaky ground. Jerry