Leaders Index 3-3-20

It was another wild ride today. The market opened lower and another decline was underway. The Fed then announced an emergency 50 basis point rate cut and the market rallied hard. It didn’t last. The major averages quickly began selling off and were mostly lower into the close. All the major averages finished near their intraday trading lows, a bad sign. The losses were pretty evenly divided. The COMPQ and the NDX were off by 3.01% and 3.19% respectively. The SPX declined 2.81%. Volume was higher across the board. It gained 6.57% on the New York and 4.71% on the Nasd. Not what you want to see. Leading stocks followed the pattern of the overall market. The leaders index sold off by 2.46% on the day and closed low in its trading range. Volume was higher and well above average. The index tagged its declining 9dma at its highs but was turned back. It was a crazy market today. The Fed’s action started a rally, but it was immediately snuffed out by selling. The market gave back most of its gains of yesterday. It also did so on higher volume, showing that large institutional players were selling stocks today heavily. When you get a selloff on high volume, a rebound on lower volume, then another decline on higher volume the market is telling you that there is distribution going on and prices are heading lower. Yesterday’s rally was fun to watch, but experienced market operators know that the biggest up days are no reason to celebrate, they are big red flags. If an emergency 50 basis point cut by the Fed, even if it was expected, didn’t get the market going It is hard to see what will cause a sustained advance. I see little reason to own stocks and the sideline is the most prudent position to be in. Jerry