The market had a rough session today and there was some real damage done. The major averages opened lower and after a fairly weak rally attempt sold off into the close. All the major averages finished at or very near their intraday trading lows as there was selling into the close. The Nasd averages took the brunt of it as leading stocks took big hits. The COMPQ and the NDX lost 2.46% and 2.63% respectively. The SPX declined .77%. Volume was mixed. It was lower by 4.06% on the Nasd and higher by 23.48% on the New York. This produced a distribution day on the New York averages. Leading stocks were hit pretty hard with the leaders index falling 4.75% on the day. The index closed near the bottom of its trading range and broke well below its important 17dma now resistance level. Volume was higher, showing that large institutional players were selling these stocks. It also showed distribution in quality growth stocks. Today’s action was pretty bad overall. About the only positive is the lower volume on the Nasd so those averages avoided distribution, but the count on the New York averages is getting up there. The chart of the leaders index is looking pretty bad. The index broke below its 17dma, tried to rally above it and failed. The relative strength line of the leaders index is also in danger of breaking below its 50dma, which would be very negative. The charts of the major averages are beginning to flash warning signs as they broke important moving average support today. The bottom line is that the rally is in more trouble now than at any time since it began in November of last year. Raising some cash might not be a bad idea. Jerry
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