The market took a big hit today. The major averages gapped lower at the open and it was mostly downhill from there. They sold off into the close and all the major averages finished near the lows of their intraday trading ranges. The losses were pretty evenly divided with the COMPQ and the NDX falling 2.61% and 2.80% respectively. The SPX lost 2.57%. Volume was much higher across the board. It was higher by 63.44% on the Nasd and 68.08% on the New York. This produced a strong distribution day on all the major averages. This is a big increase and it shows that large institutional players were selling stocks heavily today. Leading stocks were hit hard as well with the leaders index falling 3.29% on heavier but still well below average volume. The index broke below its 9dma and traded below but closed above its 17dma. The action today was very negative. There was heavy volume along with large price declines. This is the first day of heavy institutional selling in a while. The New York averages are also approaching their 50dma’s. The action has gotten almost ridicules in recent days. The action in stocks like GME and AMC shows rank speculation is taking hold. I saw a report today that inexperienced new traders are borrowing against their houses to buy into GME and other “hot” stocks. If this is true it would be a huge red flag. It is dangerous to try and pick a top and I don’t know if we have seen the absolute top yet. But it looks pretty certain that we are in at least a topping process and the risks likely outweigh any future rewards. Th recent failure of the breakout in NFLX looks like a good example of how hard it is to make progress right now. I think protecting capital is more important right now than trying to make further progress. Jerry
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