Leaders Index 3-11-20

The market sold off hard today, more than erasing yesterday’s gains. The major averages opened lower and it was mostly downhill from there. The decline was large with the COMPQ and the NDX falling 4.73% and 4.37% respectively. The SPX lost 4.89%. All the major averages closed near the bottom of their intraday trading ranges, showing little buying interest as prices fell. Volume was a bit lower across the board. It fell 2.44% on the Nasd and 2.49% on the New York. This is about the only positive in today’s action. Leading stocks were hit hard as well with the leaders index declining 5.57% on the day. It closed low in its trading range and is sitting right on its 200dma. Volume was slightly lower. The market sold off hard as coronavirus news as the WHO officially declared it a pandemic. The major averages took out recent lows and are now at bear market levels. The INDU closed down more than 20% while the SPX and the COMPQ traded down 20% but closed just above this level. I have said recently that the large rally days we have seen recently looked like strong rally days in a bear market. This looks like it is coming true. Today had the look of forced selling as all asset classes, including those usually considered defensive declined. This included gold, real estate and even Treasuries. When the margin calls go out you sell anything you can. It’s pretty clear that the recent decline will be a full-fledged bear market. The question we face now is how bad it will get. That depends greatly on the course of the coronavirus epidemic, and is thus unknowable at this time. Preservation of capital is the key right now. Jerry