The market weakened in the last few days. There was a large sell off yesterday on news of a large Chinese developer possibly defaulting on its debt. Volume yesterday was high but below Friday’s inflated expiration levels. There was no distribution but it sure felt like there was. Today the major averages opened with solid gains but couldn’t hold them. The highs were made in the first half hour and it was mostly downhill from there. All the major averages finished near their intraday trading lows. The closed were mixed with the COMPQ and the NDX gaining .22% and .10% respectively. The SPX fell .08%. Volume was lower cross the board. It fell 18.58% on the New York and 16.23% on the Nasd. Leading stocks did better than the overall market with the leaders index gaining 1.52% on the day. The index closed high in its trading range on much lower volume. The market’s overall picture deteriorated quite a bit in the last couple of days. There was a big sell on news from China, but the major averages finished in the upper half of their trading ranges, due to the big gap down at the open. That was about the only good thing you can say about yesterday’s action. When you have a big decline you want to look to the quality of the bounce to see if most of the damage is already done. Today’s bounce attempt, if you can call it that, was disappointing. There has been a lot of damage done in the last few days and the charts of the major averages are looking a little sickly. The market looks like it want to correct, but we have seen this before this year only to see things turn around. Right now it looks like the we should expect further weakness in at least the short term. Jerry
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