The Gilmo Report

February 2, 2020

February 1, 2020

More craziness marked the final two trading days of the week, but the essential message remained the same: This market is coming down. The clues were there, most notably in how important groups like the semiconductors and financials started to break down over a week ago.

Nevertheless, extreme intraday volatility made the market a tough nut to crack on Thursday before things finally resolved to the downside on Friday. And the resolution was quite ugly. The group chart of four indexes comprising the NASDAQ Composite, the Dow, the S&P 600 Small-Cap, and the S&P 500 indexes confirms this.

All four indexes sold off sharply on heavy volume, with the Dow and the S&P 600 breaking below their 50-day moving averages while the S&P 500 held support at its own 50-dma. The NASDAQ still has some room to drop toward its 50-dma if it wants to, and this would likely accompany a breach of the 50-dma by the S&P 500.

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