The market was hit hard today. The major averages opened lower and spent most of the remainder of the session declining. There was a little late rally that saw them close off their lows, but it was still an ugly day. The Nasd averages were hit the hardest with the COMPQ and the NDX off by 1.81% and 1.90% respectively. The SPX was lower by .82%. All the major averages closed low in their intraday trading ranges. Volume was mixed, higher on the Nasd and lower on the New York. This was enough to produce a new distribution day on the Nasd averages. Leading stocks were hit even harder than the overall market with the leaders index declining 2.46% on the day. The index broke below its important 50dma support level and finished low in its trading range. Volume was higher, showing that large institutional players were selling today. The recent weak action in quality growth stocks is catching up with the overall market. Today’s action was extremely negative and many leading stocks are clearly broken. The leaders index broke hard below its 50dma as many of the top stocks continued to decline. When a leading stock breaks below its 50dma on high volume it is a strong indication of trouble ahead. When leading stocks break down almost across the board the market is in real trouble. The COMPQ is now below its 50dma as well. This is a time to be very defensive and having a good level of cash is a good idea. The market has looked like it was really going to roll over several times in the last two or three years only to turn around and rally back. It could happen again, but this time looks particularly bad. At this point about the only thing that can save the market is a series of great earnings reports. Jerry
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