Jerry Samet
10-09-2014, 10:53 PM
The market completely reversed yesterday’s gains and then some with the major averages having their worst day in a long time. The major averages opened lower and sold off for the rest of the session, closing at their lows of the day. The SPY was off 2.07% while the COMPQ declined 2.02%. They moved further below their now declining 50dma’s. Volume was a bit lower than yesterday but still well above average across the board. Leading stocks took a hit as well with the leaders index declining 3.45% on lower but still above average volume. The index touched it’s 50dma during trading but was again turned back. The index is now starting to live below it’s 50dms, which is a bad sign. The relative strength line of the index has now crossed below it’s own 50dma. The clear weakness in this line shows that quality growth stocks are under performing the overall market. The picture darkened quite a bit today. We should keep an eye on the 8% down level on the major averages. This contains the vast majority of declines, and breaking below this point usually means the correction will become more severe. It sure looks like this decline has more to go. Jerry