Leaders Index 5-18-22

The market was hit hard today from the open. The major averages opened lower and it was all downhill from there. The major averages suffered large declines and more than erased the gains from yesterday’s follow through. The losses were widespread with the Nasd averages taking the worst of it. The COMPQ and the NDX fell 4.73% and 5.06% respectively. The SPX declined 4.04%. All the major averages finished near the bottom of their intraday trading ranges. Volume was mixed. It fell 1.44% on the Nasd and rose 4.05% on the New York. That combined with the price decline was enough to produce a distribution day on the SPX. Leading stocks got hit as well with the leaders index falling 4.65% on the session. The index closed low in its trading range on higher volume. That is about as quick as a follow through can fail. All the gains of yesterday were lost and more. The SPX saw its lowest close of the bear market. It also had a distribution day on the day after the follow through. This is usually fatal as distribution in the first three days after a follow through usually means it will fail. All the major averages also closed below the low of the follow through day, also a bad sign. There seems to be weakness in economic numbers and several important retailers have been hit hard on weak numbers. I was hoping that there would be enough of a rally here to show the end of the second leg of the bear market. It doesn’t look like it is happening yet. The charts look terrible and the bottom line is that most follow throughs in bear markets fail, especially the poorly confirmed ones. The overall picture is pretty ugly and if you listen carefully you can hear the faint sound of bones crunching in the background. Jerry