Leaders Index 2-28-20

We had another wild ride yesterday. The major averages again gapped lower at the open and declined into substantial losses. They spent most of the remainder of the session at with large losses. There was some buying in the last half hour of trading that erased much or all of the early losses. The Nasd averages were the strongest and actually closed with some small gains. The COMPQ and the NDX were higher by .01% and .30% on the day. The SPX was off by .82%. All the major averages closed at or very near the top of their intraday trading ranges, the first sign of support we have seen since the selloff started. Volume was again huge. It was higher by 18.08% on the New York and 15.44% on the Nasd. Leading stocks were generally higher as well on the day. After early losses the leaders index recovered and posted a gain of .49% on the session. The index closed near the top of its trading range on the highest volume on the chart. The action of the market yesterday was interesting. It looked like we would have another multi percentage point loss until buying came in late in the session to either cut the losses or produce small gains. Weather this was real buying or some kind of manipulation like the old plunge protection team action we don’t know. There were dramatic losses this week as the gains going back to last year’s follow through were mostly lost. The main culprit was the coronavirus, although the Democrat primaries where Sanders in doing very well probably contributed to the losses. There continued to be forced selling yesterday as even defensive sectors like gold and REITs got slammed along with the overall market. When the margin calls come you sometimes sell what you can, not what you want to. Gold is very liquid. A quick positive reversal near the close like we saw yesterday can often mark a short term bottom so I wouldn’t be surprised to see some positive action early next week, provided there is no more bad news over the weekend. It is still not likely we have seen an important bottom yet. They say every cloud has a silver lining. Here the decline of last week has mostly arrested the advance in the monthly Coppock as the New York averages have flattened out or turned lower. The COMPQ is still going up but much more slowly. We may see a rally next week, but I don’t think we have seen the lows of this selloff yet. Jerry