Jerry Samet
02-23-2021, 06:34 PM
It was a pretty wild session today. The major averages opened with large losses and went down further from there. Within about a half hour the major averages found a bottom and rallied from there. Very dovish comments from Powell seem to have been the cause of the rally. All the major averages finished at or very near their intraday trading highs, a sign of support. The Nasd averages took the brunt of it with the COMPQ and the NDX falling by .50% and .23% respectively. The SPX rallied back into positive territory with a gain of .13%. Volume was higher across the board. It gained 9.80% on the New York and 18.00% on the Nasd. This, combined with the price decline produced a new distribution day on the Nasd, although the strong close mitigated much of the damage. Leading stocks followed the same pattern as the overall market. The leaders index fell 1.58% on the day, but it to closed high in its trading range. Volume was higher and above averages so there was distribution in leading stocks as well, but the high close mitigated the damage here also. The market has been acting pretty weak lately. It looked early like there would be significant losses until the market rallied, likely on encouraging words from Powell. Both the major averages and the leaders index broke below their important 50dma but recovered. This is now the line in the sand for all these averages. They must hold this support and a break below it would likely mean lower prices. It looked early like enough damage would be done to end the rally. The snap back put that in question, but there are a lot of negatives out there. Leading stocks are no linger leading as there is rotation out of them. The chart of the leaders index shows this. The relative strength line of the leaders index also broke below its 50dma, a very negative sign. Also many of the stocks that have led the rally since it began on November 4 have broken down. TSLA and PTON are prime examples. There is a lot of evidence that we have seen the top, but we will have to wait and see how the market acts in the next week or two. Jerry