Jerry Samet
08-03-2019, 12:06 PM
About the only good thing you can say about yesterday’s action is that volume was lower. The weakness that began on Wednesday continued with more talk of tariffs. After opening weak the major averages rallied a little later in the session to close off their lows. Most of the damage was in the Nasd stocks with the COMPQ and the NDX falling 1.32% and 1.39% respectively. The SPX declined .73%. The Nasd averages finished in the bottom half of their intraday trading ranges while the New York averages closed just above the midpoint of their trading ranges. Volume was lower across the board, avoiding another distribution day on the major averages. Leading stocks got slammed pretty hard as well with the leaders index falling 1.51% on the session. The chart of the leaders index still looks ok. The index closed high in its trading range and held above all its short term moving average support levels. Volume was lower and below average. The action of the last three trading days has done real damage to the rally. Even after all these years trading CANSLIM stocks it is still amazing how fast these positions can roll over. Two or three months of profits can be substantially wiped out in two or three days. The rally right now is on the verge of ending. There were more new lows yesterday that new highs for the first time in many weeks. Many of the New York averages are below their important 50dma now resistance levels, but the SPX remains just above this moving average. The Nasd averages are holding this support level. The rally is in real trouble now. The distribution count is high and there was a confirmed Hindenburg Omen signal last week. Unless the market and leading stocks resume their upward action very quickly the rally is likely over. Jerry