Market Notes: More deterioration!

By Gary K

More deterioration…simple as that. Most are blaming Friday’s swoon after a strong open on the Clinton news and gather they are correct. But we do not rationalize.  Just remember, markets have been deteriorating for weeks. And now:

The Russell 2000 indeed broke the support we outlined for you at about 1200. In order for others to join in, the Dow would have to cleanly break below 17,992 and the S&P at 2119…and that has not happened yet. Both do trade below the 50 day average.

But…the NASDAQ and the NDX have now broke below the 50 day. Big names like Amgen and Amazon contributed to the downside. Amgen basically crashes on earnings…Amazon breaks the 50 day on a downside gap.

The bigger problem is sector-wise. While major indices are just a few percent below highs, there are more yearly lows than highs on both exchanges. This is not great news. On top of that, except for financials and semis, not much else is holding up. The oils were holding up but we are now seeing cracks. We are also not seeing much turning up. Maybe the cruise lines, maybe the airlines starting to come on but not thrilled. On the negative front is just about everything else with everything health care continuing to melt down. In fact, we saw a bunch of crashes in biotech, drug wholesalers and a few other areas. We could list you the rest of the negative areas but it is basically everything led down by interest-rate sensitive areas we have been telling you about for weeks.

We now head into a Fed week (They will do nothing!) and then the election. We don’t have to tell you how depressing this election has become. Many are making calls based on who may or may not win. We would rather let the market decide. Patience continues to be imperative.