The market started out strong across the board today, but again it didn’t last. There was a continued divergence between the New York averages and the Nasd averages. There were new highs on the New York averages, but they lost much of their gains by the close. The COMPQ and the NDX finished with losses of .19% and .16% respectively. The SPX ended with a gain of .15%. All the major averages closed either in the lower half of their intraday trading ranges or at the bottom of those ranges. This is a sign that selling came in as prices rose. Volume was higher across the board and above average on the New York. The COMPQ just missed a new distribution day by a hair because the decline was just below the threshold. The SPX looked a little like stalling. Leading stocks were generally weak with the leaders index declining .67% on the day. The index closed low in its trading range, but is holding just above the important 50dma support level. Volume on the index was higher than yesterday and about average. This showed distribution in leading stocks. There was a continuation of the divergence between the New York and Nasd averages. Weakness in tech stocks continue to hold these averages back. The semiconductor stocks showed particular weakness as the chart of the SOX shows a break of the 50dma, a rebound to this now resistance level and an inability to get back above it. This usually means that prices will continue lower. The financial and some value related stocks continued to help the New York averages. Today saw declines not only in the Nasd and Sox averages, but the small and mid-cap stocks declined as well. How this divergence is resolved will determine if we will continue higher or see a meaningful decline. Jerry
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