The market staged a nasty reversal today. The major averages opened higher after an encouraging PPI report, but it didn’t hold. Selling soon came in and all the major averages declined into the close, finishing near their intraday trading lows. The COMPQ and the NDX fell 1.24% and 1.27% respectively. The SPX declined 1.56%. Volume was higher across the board, adding a distribution day to all the major averages. Leading stocks sold off as well with the leaders index falling 1.39% on the day. The index closed low in its trading range. Volume was higher and above average, showing distribution in leading growth stocks. The market started off with solid gains after the PPI report came in below expectations. Some economic reports came in weak and Fed officials gave some hawkish comments. Selling came in and the market declined into the close. There was distribution across the board, the second day in a row for the SPX. Both the COMPQ and the SPX have declined back to their respective 50dma’s. A break of this important moving average support would be very negative. It seems that market concerns are shifting from inflation to recession. Bad news has been good for the market until today and it seems that the weak economic data trumped the better than expected inflation data. The current rally attempt is at an important point. Further weakness here would signal the failure of the rally and lower prices ahead. Earnings season will kick into high gear later this week and especially next week. That will set the tone for trading. Jerry
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