The market really got pasted today. There was concern about the strength of the recovery and an increase in Covid cases and that spooked the market. The major averages opened sharply lower and sold off for most of the remainder of the session. All the major averages finished at or very near their intraday trading lows as there was little if any buying interest as prices fell. The losses were pretty evenly divided with the COMPQ and the NDX falling 5.27% and 5.01% respectively. The SPX lost 5.89%. Volume was higher across the board. It climbed 7.27% on the New York and 2.25% on the Nasd. This shows that large institutional players were selling stocks today and produced a fresh distribution day on all the major averages. Leading stocks sold off as well, but slightly less than the overall market. The leaders index declined 3.32% on the session. The index closed low in its trading range but held above its important 17dma support level. Volume was higher and above average, showing distribution in quality growth stocks. The market sold off hard today on higher volume. There was a distribution day today, but the overall count remains moderate. A lot of damage was done today. The market may have been getting a bit ahead of itself in the short term and some consolidation or weakness would not be unusual. Today’s action was however a bit more than you would like to see. It was the biggest decline since the middle of March. Some important support levels were broken and the higher volume was negative. A couple of the shorter term indicators I follow also turned down today. The Summation Index and the A’s minus E’s both were slowing down in the last couple of days and have now signaled. This doesn’t mean the rally is over ,but some near term weakness is likely. The higher volume today was a disappointment as it shows large institutional players were sellers today. This could turn out to be a short term selloff in a continuing rally or the end of the rally. It is to early to tell for certain now, but the overall picture has darkened and a more defensive posture is warranted. Jerry
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