Jerry Samet
12-16-2021, 06:33 PM
After yesterday’s follow through the market started out higher but quickly reversed lower and sold off for most of the remainder of the session. All the major averages finished near the bottom of their intraday trading ranges. The Nasd averages took the worst of it and lost all of yesterday’s gains. The COMPQ and the NDX fell 2.47% and 2.61% on the session while the SPX declined .87%. Volume was mixed. It fell 8.30% on the Nasd and rose 6.23% on the New York. That combined with the price decline caused a distribution day on the SPX. Leading stocks were hit hard as well. Since yesterday was a follow through I put together a new leaders index. It has twenty stocks in fourteen industry groups. The index fell 1.26% on the day. It closed low in its trading range on higher and well above average volume. I was suspicious of the follow through yesterday and that turned out to be correct. After opening higher the major averages had a negative reversal and sold off the rest of the day. The Nasd averages lost al of yesterday’s gains while the New York averages held up better. The higher volume on the New York constituted a distribution day on the SPX. A distribution day right after a follow through is very negative and usually means that the follow through will fail. Leading stocks were hit hard and there was distribution in the leaders index as well. A rally caused by a Fed announcement is always suspect, and this one looks like it will fail quickly. Jerry