The market put in a disappointing performance yesterday. After a strong open the major averages rallied to solid gains for almost two hours. It looked like there would be good gains for the session. Then the market started selling off and declined into the close, losing almost all the gains. The COMPQ finished with a gain of .09% while the SPX fell .08%. This was the bottom of the intraday trading range for all the major averages, a very negative sign. Volume was lower across the board, which is not unusual on a Friday in the summer and shows that there was not heavy selling by large institutional players. Leading stocks followed the same pattern as the overall market, but held more of their early gains. The leaders index was higher by .84% on the day and while it closed in the lower half of its trading range it was off the lows of the day. The index got above its short term 9dma and 17dma during the session but couldn’t hold it. Volume was higher than Thursday in what looked like some stalling type action in quality growth stocks. It looked like we would have a positive session early as the major averages and many leading stocks showed good gains. It didn’t last as the market spent most of the day giving back those gains. A market that opens strong and closes weak is showing negative action. The INDU and the Nya are below their 200dma’s while the SPX is sitting right on its 50dma. The Nasd averages are a bit above their 50dma’s. The market is acting poorly right now and a defensive posture is called for. Earnings season will be starting soon and if the numbers are good it may give a bit of a kick to the market, but recent action is not encouraging. Jerry
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