The market sold off hard early as selling that started in China spread to the rest of Asia and then to Europe. The major averages gapped down at the open and dropped to major losses in the first hour of trading. The market then bottomed out and began to rally almost into the close. Most of the early losses were erased and the COMPQ traded higher for a bit. The COMPQ and the NDX ended up declining .42% and .32% respectively. The SPX fell by .55%. All the major averages finished near the top of their intraday trading ranges, a sign of support. Volume was higher across the board. This would normally be considered distribution, but the rally and the high close were actually signs of accumulation. Leading stocks were mostly lower, but like the major averages they closed high in their trading ranges. The leaders index finished the session lower by .45% but it closed near the top of its trading range. Volume was higher and well above average. It looked like there would be a really strong decline today before the market and leading stocks rallied back to regain most of the losses. The kind of intraday reversal we saw today can often put in a short term bottom. The major averages took out the intraday lows of the rally day low last week and have now reset the count. Clearly there was buying coming in today as prices fell and this is positive. It would not be surprising to see the market rally for a short period after this reversal, but a lot of damage has been done and a lot more work is necessary before a solid rally can take hold that is supported by positive action in quality growth stocks. Jerry
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