The is really nothing good you can say about today’s market action. The major averages opened lower and spent most of the remainder of the session working their way lower. All the major averages finished near their intraday trading lows as there was little if any buying interest as prices fell. The Nasd averages were the weakest with the COMPQ and the NDX falling 4.96% and 5.23% respectively. The SPX declined 3.51%. Volume was higher across the board. It increased 16.58% on the New York and 11.45% on the Nasd. This, combined with the price declines, was enough to add a distribution day to all the major averages. Leading stocks were hit hard as well. The leaders index fell 6.77% on the day and closed in the lower half of its trading range. It broke below its short term 9dma but held above its 17dma. Volume was a lot higher and well above average. What a difference a day can make. Yesterday things looked good and the only real worry was how extended the market was. I was saying a consolidation or pull back was likely, but this is not how you want to see it unfold. Today’s decline was ugly and the stocks that have been the leaders got hit hard. The size of the declines in the major averages we saw today is usually seen in bear markets. I don’t think we are in a bear now, but today’s action was a real shot across the bow. It would not be unusual to see some profit taking before a long weekend and a big employment report due tomorrow. There was also negative talk about a vaccine before the end of the year. One day’s action doesn’t change a trend by itself, but this type of one day decline is unsettling. We have to see if we can get a strong snap back quickly, hopefully on volume. It that doesn’t happen a more defensive posture would be warranted. Jerry
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