It was a pretty ugly session all around today. The market opened lower and it was all downhill from there. Higher interest rates caused the major averages to open lower and finish near the lows of the day. The declines were pretty evenly divided with the Nasd averages getting it a little worse. The COMPQ and the NDX fell 2.83% and 2.86% respectively. The SPX declined 2.04%. The small and mid-cap averages that were so strong yesterday sold off hard as well. Volume was higher across the board. It gained 7.71% on the Nasd and 16.39% on the New York. This showed that large institutional players were selling today and produced another distribution day on all the major averages. Leading growth stocks were hurt even worse than the overall market. The leaders index fell 4.69% on the day and closed low in its trading range. The index broke through its important 50DMA support level on very heavy volume. This shows distribution in quality growth stocks. There was serious damage done today to both the major averages and leading stocks. The major averages had broken through their 50dma’s last week and recovered this important moving average later in the week. Today they broke back below this support level on heavy volume. This is very negative action. Leading stocks did even worse. The leaders index broke its 50dma on heavy volume ,which in quality growth stocks is a big red flag if not a clear sell signal. Recent breakouts are failing and stocks that have been leaders for a long time broke down . The distribution count is also high. We have seen the market on several occasions this year sell off and look like they would produce a meaningful correction only to rally back and make new highs. That may happen again, but today’s action was enough to take a very defensive stance. Jerry
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