The underlying weakness of the market became a little more evident on Thursday ahead of the long three-day Easter Holiday weekend. The S&P 500 Index made a lower closing high on slightly higher volume, adding to the string of distribution days it has logged since mid-March. In the process, it has moved further below its 50-day moving average, which now represents overhead resistance.
The slightly higher trading volume was interesting given that it occurred on the final trading day before a long holiday weekend. The expectation was that trade would slow down as traders left for the Hamptons, but those weekend getaway plans were apparently put on hold long enough to get some selling done.
Meanwhile, on Thursday the NASDAQ Composite Index logged its first close below the 50-day moving average since December 2nd of last year. Volume came in slightly lighter, which would be expected ahead of the three-day holiday weekend. However, relative to volume levels over the past several days, this was not a significant volume dry-up.
Objectively, the index action looks bearish, but the signs were already there per my report of last weekend. I might also add that, at least to my nose, a bad smell has been emanating from underneath the hood of the market for at least a little while.
Whether it is just an olfactory hallucination, as can often be the case in this Ugly Duckling environment, or indicative of something more ominous, depends on what individual stocks are doing. In many cases, if you are focusing on and watching your stocks, as you should be, you are watching them breach through nearby support levels. Over this past week the action in individual stocks added to the odor.