Leaders Index 2-24-20

The market really got pasted today. The major averages gapped down at the open after there were several more outbreaks of the coronavirus outside China. There was not even a solid attempt at a rally as all the major averages finished near the bottom of their intraday trading ranges ,showing little buying interest at lower prices. The losses were pretty evenly divided with the COMPQ and the NDX losing 3.35% and 3.89% respectively. The SPX fell 3.35%. Volume was much higher across the board. It rose 28.21% on the New York and 17.02% on the Nasd. This combined with the price declines produced new distribution days on all the major averages. Leading stocks sold off as well with the leaders index declining 3.74%, about in line with the overall market. The index closed just above the middle of its trading range, but it broke below the critical 50dma. Volume increased dramatically and was the highest in weeks. The relative strength line of the leaders index is close to breaking its 50dma. There was really nothing you could say about today’s action that was good. The market has seemed to not worry about the coronavirus as long as it caw contained in China. That changed with a vengeance in the last couple of days as there were new outbreaks in South Korea, Japan, Italy and Iran. This shook markets around the world. The market may have sniffed this out on Friday as it sold off hard then. The two day decline is dramatic. All the major averages and the leaders index broke below their important 50dma’s on very heavy volume. This shows that large institutional players were dumping stocks today. The distribution count is getting high and we are one day away from a distribution cluster. Futures are a little higher as of this writing and I would not be surprised to see a bounce in the next couple of days. The strength of any such bounce would be important. It also looks like the weekly Coppock will give a sell signal this week if it closed the week where it is now. Right now the rally appears to be broken and even though there may well be a bounce in the next couple of days serious damage has been done and the likely hood is for lower prices ahead. Jerry