The market sold off hard today, partly on news that China was imposing retaliatory tariffs. The major averages opened lower and spent most of the rest of the session declining. A little late buying saw the major averages close off their lows, but they all still closed low in their intraday trading range. The COMPQ finished with a decline of 2.74% while the SPX lost 2.23%. Volume was very close on the Nasd and higher on the New York. This shows that there was selling by large institutional players. Leading stocks were hit hard as well with the leaders index declining 2.68%. The index closed low in its trading range and below the critical 50dma for the first time. This is a very negative development. Volume on the index was lower than Thursday and about average. The action today continues the negative trading we have seen recently. The SPX joined the NYA below its 200dma, a very negative development. The leaders index fell below its important 50dma support, usually the line in the sand after which a leading stock is considered broken. There may well be some sharp rally days in the near future, especially if there is some good news on trade, but they are unlikely to amount to much. There were two strong rally days last week that were quickly erased by even stronger declines. The SPX and the COMPQ are both slightly more than 10% below their recent intraday trading highs, so the chances of them going down to a full intermediate correction of 12% to 15% are high. Things look pretty ugly right now and I don’t think we have seen the bottom. Jerry
Reply With Quote