Market Tumbles and Erases Gains

On Thursday, the market did a nose dive, erasing all of Wednesday's gains and more. As alluded to in yesterday's email, the Nasdaq tested its 50 EMA today (from below) and was summarily rejected. Both the S&P and Dow blasted down through their 50 EMAs after having closed above them on Wednesday. 

The key to today's decline can be traced back to yesterday's volume which was lower despite gains of over 1% in each of the three major indices. Strong moves should be accompanied by strong volume if the BIGs (big institutional guns) are actively buying. Yesterday's upside move was more likely due to shorts covering and taking profits.

The Nasdaq plummeted -129 points (-3.10%), a bigger loss than last Friday's -110 points. Two strong down days this close together is strong evidence of dumping by the BIGs. The S&P tumbled down for -39 points (-2.09%). The Dow choked, falling -266 points (-1.62%). 

Volume was higher for all three indices. The decliners led advancers by over 3-to-1 and down volume dominated up volume by an eye-popping 6-to-1. 

Losing sectors today included Biotech, Healthcare, Financials, and Consumer Discretionary.

Tomorrow's Economic Reports: PPI and Michigan Sentiment