After opening higher the major averages saw their highs in the first five minutes and were lower the rest of the session. A little late strength saw the major averages close off their lows of the day , but still in negative territory. The COMPQ was off by .47% on the session while the SPX declined .29%. All the major averages closed near their intraday trading lows as there was little buying support. Volume again played an important role in yesterday’s action. It was lower across the board, showing that large institutional players were not heavy sellers. It also means that there was no distribution on the day. Leading stocks were lower as well with the leaders index falling .93% on the session. The index closed just below the mid point of its trading range, a bit better than the major averages. Volume was higher than Thursday and above average. This shows distribution in quality growth stocks. The index tagged its 9dma support level at its lows but held well above this short term support level. The action of the market yesterday was mixed. The major averages declined but volume was lower so there was no distribution. There have been two down days since the follow through last Tuesday, but they both have been on lower volume. If there is distribution within three days of a follow through it is very negative and usually means the follow through will fail. We are now past that window, which is positive. Several of the major and secondary averages made runs for their 50 day moving averages yesterday and were turned back. The next real test of this rally attempt is for these averages to break above this important resistance level with some real conviction, meaning strong volume. If they can’t then the rally attempt will fail. Jerry
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