Markets were hammered Friday to end a week which has historically been weak, with the Nasdaq down 2.2% and the S&P 500 by 1.9%. For the Nasdaq it was the third decline of 1.5% of more in the last 7 sessions (volume was elevated and above the normal daily average all 3 times) and it undercut both its 50 and 200 day SMAs in the process. It lost 4.1% this week, its second weekly drop of 4% or more in the last 5, but still remains higher YTD by 4.2%. Until recently it flirted with a possible double digit yearly gain which would have been its 6th in the last 7 but that now looks increasingly unlikely. The S&P 500 declined 3.8% for the week and as we said yesterday very tight weekly or daily CLOSES can lead to dynamic moves. The index certainly did that this week breaking LOWER obviously from the previous 3 weekly finishes which were all within 2.5 points of each other. Both the Nasdaq and S&P 500 are now 6% off recent all time highs and the S&P 500 is now looking at its round 2000 number for support. The 5000 figure did not help the Nasdaq at all Friday. We believe a major top could be in on the Nasdaq with highs this year in July roughly in line with those made early in 2000. We have recently discussed as well the importance of the Nasdaq leading overall. That strength has been waning and looking at yearly moves since 2000 it has declined only 5 times, and 4 of them have been substantial with drops of 39.3, 21, 31.5 and 40.5% in 2000, 2001, 2002 and 2008. Next year could be a difficult one. Highlights this past week included crude slipping almost 11% this week and other commodity names announcing big layoffs, suspending dividends and stating big cap ex declines. It does seem pessimism is pervasive in the energy space and I wonder to myself if the recent upgrades in the group by the banks are partly them trying to give them a boost since the high yield loans they have were written by them. Trying not to beat a dead horse to much some retail names which should be benefactors of low gas prices are not cooperating. Look at best of breed RH. RH lost 9.3% this week for its 5th weekly loss in its last 6 and is now down 21% from recent all time highs.

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