Jerry Samet
11-01-2016, 07:05 PM
The market sold off pretty hard today as the major averages were lower the entire session. After opening lower all the major averages declined steadily until near the close when a little late rally saw them close off their intraday trading lows. The COMPQ declined by .69% and the SPX lost .68%. Volume was higher across the board, producing another distribution day on all the major averages. That raises the total to eight on both the COMPQ and the SPX. This is a high number. Leading stocks had another bad session as well with the leaders index falling 1.44% and closing near the bottom of it’s intraday range. The index is now well below the important 50dma and that support level is now resistance. The relative strength line of the leaders index is now sitting right on it’s 50dm and will likely break below this support. The charts of the major averages and the leaders index are looking worse by the day. Most of the quality growth stocks that have led the rally have broken down and are now in declines. Few new ones are stepping up to take their place. It certainly looks like we are headed for a correction. The problem is that every time in the last two or three years when it looked like the market was going to get into a real sell off it stopped short and resumed an uptrend. This was more in the major averages than in canslim type stocks, but we can’t be confident that it will not happen again. It’s hard to say where the market will go in at least the short term so a good deal of caution is warranted. Jerry