Jerry Samet
07-13-2020, 06:32 PM
The market put in an ugly reversal today. The major averages opened higher and rallied to solid gains. About two or three hours into trading, depending on the major average, they reversed and went into a strong selloff. News of California going back to a limited lock down spooked the market. All the major averages finished at or very near their intraday trading lows, showing little buying interest as prices fell. The Nasd averages were hit the hardest with the COMPQ and the NDX losing 2.13% and 2.16% respectively. The SPX was off by 1.34%. Volume was higher across the board. It gained 38.64% on the Nasd and 6.17% on the New York. This showed that large institutional players were selling stocks today and produced a distribution day on all the major averages. Leading stocks were hit hard as well with the leaders index falling 3.98% on the session. The index closed low in its trading range and also below its short term 9dma support level. Volume was higher and above average, showing distribution in quality growth stocks. The action today was troubling. These kind of ugly reversals are very dangerous and can often signal a change in trend. This is one of the ways that rallies end. It is still to early to say that, but today’s action was a real shot across the bow. The charts of both the leaders index and the major averages are showing nasty reversals from the tops. This is not positive action. It is to early to get too negative and the futures are a little higher as of this writing, but this is the most negative session we have seen since the rally started. We have to rebound quickly and with some conviction in the next few days. If the market can’t rally back then we could very well have seen the top. Jerry