After a good sized sell off you look to the quality of the bounce to give a clue as to whether the worst is over. We didn’t get much encouragement today. The major averages opened strong but selling quickly came in and they lost most or all of the gains. The Nasd averages were the strongest with the COMPQ and the NDX higher by .32% and .47% respectively. The SPX declined by .12%. All the major averages closed at or very near their intraday trading lows, a negative sign. Volume was lower by 2.42% on the New York but was off only by .08% on the Nasd, according to Esignal. This means that different data feeds could have different results. Either way there was no distribution. Leading stocks were about flat with the leaders index up by .06%. The index closed in the upper half of its trading range but mover further below its important 17dma resistance level. Volume was lower and below average. The action of the market today was not encouraging. Strong early action was met by selling almost immediately and the market closed weak. This is not the signature of a strong market. The distribution count remains modest, but very few leading stocks are producing worthwhile gains. The rally attempt that began with the recent follow through has not been officially killed yet, but the market is clearly not acting well. New from the G20 conference could send the market moving in either direction, depending on the outcome, but right now the rally is clearly under stress. A good degree of caution is a good idea right now. Jerry
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