The market put in a nasty reversal yesterday. The market opened higher after a mixed employment report, but couldn’t hold the gains. Selling came in and the major averages bounced around before closing weak. All the major averages finished near the bottom of their intraday trading ranges. The COMPQ and the NDX fell 1.16% and 1.53% respectively. The SPX declined .65%. Volume was higher across the board, producing a distribution day on all the major averages. Leading stocks were lower as well with the leaders index falling 2.10% on the day. The index closed low in its trading range on higher and above average volume. The index broke below its short term 9dma but held above its 17dma. The market had a pretty negative session yesterday. After opening higher the market couldn’t hold the gains and finished weak. This reversal is negative and is a reason for concern. The market seems to be struggling now. Last Friday the major averages broke into new high ground on higher volume. A strong market would have built on those gains and worked its way higher. That didn’t happen. The market struggled this past week and most of the gains from the break to new highs have been lost. The distribution count is very high now. This rally is now more than four months old. There have been rallies that have lasted longer, but they are more the exception than the rule. A more cautious approach is warranted now, and taking some gains off the table is probably a good idea. Jerry
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