The market put in a nasty reversal today. It actually opened with nice gains after the events in the middle East this weekend. It didn’t last and the major averages reversed and sold off into the close. All the major averages finished near their intraday trading lows. The COMPQ and the NDX fell 1.79% and 1.65% respectively. The SPX lost 1.20%. Volume was mixed, about flat on the New York and higher on the Nasd. This produced a new distribution day on at least the Nasd averages. Leading stocks were hit as well with the leaders index falling 1.30% on the day. The index closed low in its trading range on higher but below average volume. The market continued its weak action today. After the events in the Middle East you might expect a weak or at least cautious open. It turned out to be good, but it didn’t hold and an ugly correction set in. The major averages reversed lower and sold off hard. All the major averages broke below their 50dma’s today for the first time since the rally started in early November. The leaders index is sitting right on its 50dma and is looking weak. It’s pretty clear at this point that a correction has started, and it will likely be an intermediate term one. We should be ready to see the market correct for a while. We are coming into the summer months, and very few successful intermediate term rallies have begun in the summer months. The weekly Coppock will take at least a couple of months to get into negative territory and be in a position to signal a new rally. I think it will be difficult to make progress in the next few months, and a correction of 8% or somewhat more is in the cards. It might be a good idea to enjoy the summer and keep your capital in a safe place. Jerry
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