The market got slammed yesterday as the employment report came in higher than expected. The major averages gapped lower at the open and it was all downhill from there. All the major averages finished near their intraday trading lows. The COMPQ and the NDX fell 3.80% and 3.88% respectively. The SPX lost 2.80%. Volume was higher across the board. It gained 2.91% on the New York and 2.49% on the Nasd. Leading stocks were hit as well with the leaders index declining 2.78% on the day. The index closed in the lower half of its trading range on lower volume. The market did a complete reversal on Friday and most of the gains from the first two trading days of the week were lost later in the week. All the market participants that jumped in on Monday and Tuesday after a weak economic number jumped out again after the employment report shot holes in the Fed pivot theory. This shows that not everyone has given up on the market, which is what you see at major bear market bottoms. The Fed will likely go ahead with a 75 basis point increase early next month and will likely do more at future meetings. The major averages held above recent lows so the rally attempt is still in effect, but I wouldn’t bet on it holding. I think we have a while to go in this bear market, at least in time. Hopefully prices will not drop much further. Either way the bear is not over and the best course of action is caution until there is more evidence that the market has hit its ultimate bottom. Jerry
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