The market turned in a pretty ugly session today. The major averages opened lower and were in negative territory the entire session. The Nasd averages were hit particularly hard with the COMPQ and the NDX lower by 1.19% and 1.30% respectively. The New York averages held up better with the SPX declining by a lesser .28%. The Nasd averages finished near their intraday trading lows and the New York averages closed in the upper half of their trading ranges. Volume on the Nasd was much higher than yesterday while on the New York it was a little higher. Both were above average. This was enough to produce fresh distribution days on all the major averages. Leading stocks were hit hard and almost across the board. The leaders index fell 1.85% on the session and closed in about the middle of its trading range. It finished below the short term 9dma but found support at the 17dma. Volume was much higher and well above average, showing that there was heavy selling in leading stocks. Today’s action was very negative. The best thing the market had going for it was the outperformance of quality growth stocks. That was put into some question today. One session’s action doesn’t really change the picture and leading stocks could well rebound. Yesterday I said that two short term indicators I look at, the Summation Index and the A’s minus E’s have turned lower. That may well forecast some short term weakness. A single bad session usually doesn’t change the overall picture, although it raises some yellow flags. We need to see a rebound in the leading stocks quickly to made sure the advance continues. A couple of more days like today would change those yellow flags turn red. Jerry
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