The market opened higher after the CPI report came in a touch below expectations. The gains didn’t last as selling came in and the major averages worked their way lower the rest of the day, finishing near their intraday trading lows. The Nasd averages were the weakest with the COMPQ and the NDX falling .85% and .89% respectively. The SPX fell .41%. Volume was higher across the board, although it was close on the New York. This along with the price declines produced a distribution day on all the major averages. Leading stocks were moderately lower as well with the leaders index falling .42% on the day. The index closed in the lower half of its trading range on higher but below average volume. The index also held above its 17dma support level. The market put in a negative session overall today. There were solid early gains after the CPI report was slightly better than expected, but it quickly faded. It was mostly moderately downhill from there until the Fed minutes caused selling into the close. This is weak action overall as we had a strong open and a weak close, on higher volume as well. The rally is clearly struggling and the distribution count on the COMPQ is now three. Moderate but something to watch. It is looking more and more like the recent follow through that triggered the current rally attempt will fail. This will likely be followed by some sideways to moderately lower action until a new set up is possible. This is the middle road scenario. There could also be a larger sell off if there is some news or event that triggers a decline. This is the low road scenario. I personally favor the middle road scenario, but only the market knows for sure. Jerry
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