The market got hit again today as the major averages opened lower and were down all day. The COMPQ was off by .79% while the SPY fell.71%. The small caps, which have ben the strongest lately were also down as the RUT lost .63%. All the major averages closed near their intraday lows, so there was no meaningful late bounce. Volume was the key difference from yesterday. It was higher across the board so there was distribution on all the major averages. This is the first real clear cut distribution day since the recent follow through. The COMPQ is sitting on it’s 10dma while the SPY closed below it for the first time in almost a month. Leading stocks were hit also with the leaders index off by 1.32% on higher and well above average volume. The index remains right on the 9dma. This is also the first real negative day since the rally began, but the index is holding the 9dma, an important short term moving average. It is hard to get to negative on quality growth stocks while the leaders index is above all it’s short term moving averages. Today was the first really negative day and weather you blame it on Iraq or just plain profit taking, it is a warning sign. The market needs to rally back quickly and with some conviction to show that this is not something to worry about. Another day or two like this and the rally could well be in trouble. Jerry
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