The market put in a mixed session yesterday, but overall it was a disappointing day. After a big sell off you look at the quality of the bounce to judge if the worst is likely over. Yesterday was pretty weak. The Nasd averages were the strongest and started out with solid gains, but they didn’t hold. The COMPQ and the NDX were higher by .56% and .63% respectively, but the larger early gains were lost. The SPX declined .48% on the day and the only real strong gains were in the semiconductor stocks with the SOX higher by 2.28%. The Nasd averages finished in about the middle of their intraday trading ranges while the New York averages closed near the bottom of their trading ranges. Volume was lower across the board. It fell 12.13% on the Nasd and 8.26% on the New York. This shows less institutional activity yesterday than in Thursday’s decline. Leading stocks generally outperformed yesterday, but it wasn’t great action. The leaders index gained 1.47% on the day and closed in about the middle of its trading range. Volume was slightly higher and above average. Both the index and its relative strength line remain below their respective 50dma’s. The action of the market yesterday doesn’t do much to improve the overall picture. The Nasd averages had solid early gains but most of those gains were lost by the close. The New York averages were in negative territory most of the session and closed weak. The leaders index and the Nasd averages remain below their 50dma’s while the New York averages are sitting right on this important moving average. Probably the most negative factor out there now is the weak action in leading stocks. Most of the leaders of not only this rally but going back to the market bottom late last March are breaking down. These include great leaders like TSLA, PTON and ZOOM. When the leaders break down it is a big red flag and the overall market usually follows. The market hasn’t completely broken down yet and could still right itself, but things look pretty shaky now and protecting capital should be the primary focus. Jerry
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