The market took a pretty good pasting today. After opening higher the major averages quickly reversed and sold off for the rest of the day. The Nasd averages led the way lower with the COMPQ off by 1.70% while the NDX lost 2.10% The SPX was lower by 1.34%. All the major averages finished trading near their intraday trading lows, showing that there was little buying interest as prices fell. Volume was considerably higher across the board. This means that large institutional players were selling stocks heavily today and produced fresh distribution on all the major averages. Leading stocks were lower as well, but not as much as the overall market. The leaders index was lower by .80%, less than the major averages. The index closed right on its important 17dma support level. This is important as the best leaders advance above their 17 day moving averages. Volume on the leaders index was higher but still below average. This was enough for distribution in quality growth stocks. The action of the market today was very negative. The major averages fell all day and closed with substantial losses. They moved further below the important 50dma resistance levels and the New York averages are close to their 200 day moving averages. The charts of the major averages are looking ugly. The New York averages are showing clear declining trend lines that control their patterns. The Nasd averages are showing what appear to be developing head and shoulder patterns, a very negative development. The SOX has a similar pattern and appears to have broken its neck line. This is a time for real caution as not only is the current rally attempt signaled by the last follow through in real trouble, but there are increasing signs that the longer term bull market is having problems as well. Jerry
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