The market continued its pullback today. After a stronger than expected inflation report the major averages opened lower and then quickly rallied back to almost even. That didn’t last long as selling came in and lasted pretty much into the close. All the major averages finished low in their intraday trading ranges. The Nasd averages took the worst of it with the COMPQ and the NDX fell 1.66% and 1.44% respectively. The SPX lost .82%. Volume was mixed. It fell 4.19% on the Nasd but rose 16.65% on the New York. That was enough for a new distribution day on the New York averages, the second in a row. Leading stocks were hit hard today with the leaders index declining 5.64% on the day. The index closed in the lower half of its trading range but held its important 17dma. The volume was higher and well above average. This shows distribution in quality growth stocks. The pullback continued today as bad inflation numbers hit the market. We saw the biggest decline since the follow through. The decline today, combined with yesterday’s selloff produced two distribution days on the New York averages in a row. The overall number is still low, but that is concerning. The poor action in leading stocks combined with higher volume on the decline is another matter of concern. Overall the rally is still on track, but the distribution and the big decline in leading stocks is something to keep an eye on. If it gets much worst the overall picture will darken. Jerry
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