Jerry Samet
10-07-2014, 11:29 PM
It was an ugly day today. The market gapped lower at the open and it was all down hill from there. After a weak rally attempt the major averages sold off for the rest of the session and closed at their intraday lows. The COMPQ and the SPY were off by about the same amount, 1.56% and 1.51% respectively. They have moved further below their 50dma’s and are starting to look like they are in a real down trend. Volume increased dramatically across the board and was well above average. This showed that large institutional players are dumping stocks with some conviction. Leading stocks were hit hard as well with the leaders index falling 2.38% on higher and above average volume. The index is now below it’s critical 50dma and it closed near it’s intraday low. When a leaders index breaks below it’s 50dma it is a sign that the index is finally broken. This is the first time the index has been below this moving average since it was created. We have not taken out the recent lows in either the major averages or the leaders index but it looks like this will happen. The only positive I can see now is that the A’s minus E’s turned up today, but it was a small increase and it will take a few more days of higher plots before I put to much weight on it. Few if any quality growth stocks are working well right now and the the major averages are weak. This has happened several times in the recent past and the market turned around and headed higher. This time the picture is pretty bleak and we may well be in the early phases of a real correction. We will have to see which way the market will go, but the beach looks pretty good right now. Jerry