The stock market has become extremely volatile, trading up and down hundreds of Dow Jones points in a day. But our indicators have remained steadfastly bearish throughout the last few weeks. For example, despite several big rally days, $SPX never broke the downtrend line that connects its series of lower highs. Until that downtrend is broken, the $SPX chart will be bearish.
The stock market, as measured by the Standard & Poors 500 Index ($SPX) has broken down badly this week. The decline accelerated after breaking through minor support at 1965. The $SPX chart is now in a downtrend.
One more thing re the $SPX chart: It has been 681 trading days since $SPX last touched the 200-day moving average (on November 20, 2012). This is a record just waiting to be broken. Perhaps this will be the time.
$SPX broke below the bottom of the previous trading range. That is, $SPX closed well below the previous support in the 1978-1985 area. If it can close below 1978 again today, that would confirm the downside breakout and would generate a confirmed sell signal for the intermediate-term.
Equity-only put-call ratios have been on sell signals for nearly two weeks. As long as these ratios are trending higher, that is bearish for the broad market.
Early this week, $SPX closed at a new relative low, and many of the indicators appeared to be turning bearish (for example, $VIX closed above 14). However, prices have rallied since then, and $SPX made a marginal new all-time high today -- both intraday and closing. Is this probe upwards more effective than the probe downwards was a few days ago? It's hard to say, but a further close at new highs would solidify an upside breakout.
Recently the historical (also called actual or statistical) volatility of many of the major indices and their derivatives reached extremely low levels. For example, the 10-day historical volatility of $SPX dropped to 3.7%! In this article, we’ll examine how often this has occurred in the past and what it has meant for the broad stock market going forward from that low volatility reading.
The Standard & Poors 500 Index ($SPX) has made repeated new all- time highs -- both intraday and closing -- over the past three weeks. This action has, of course, resulted in a "bullish" $SPX chart.
The bears have made several attempts to sell the market intraday, but each time it seems to quickly regain strength especially late in the day.
Equity-only put-call ratios have remained bullish, AS well.
The bullish news is that $SPX has made a new all-time intraday high for the last three days in a row. The not-so-bullish news is that $SPX has failed to close at a new all-time on any of those days. This is the action of a tired market.
The $SPX chart (Figure 1) remains bullish unless $SPX closes below 1985 -- the upper horizontal line.
Equity-only put-call ratios remain on buy signals, however, despite the recent action.
$SPX broke out to new all-time intraday and closing highs this week. New all-time closing highs were made on 4 of 5 consecutive days, which confirmed the move, so the $SPX chart is bullish once again.
Equity-only put-call ratios have finally rolled over to buy signals. To the naked eye, they rolled over more than a week ago, but to the computer, the confirmed buy signals only arrived a couple of days ago.
The rally that began on August 8th has extended quickly and strongly to take $SPX to new intraday and closing all-time highs. When it crossed over resistance at 1960, the $SPX chart improved from "bearish" to "neutral." If another all-time closing high is registered today, that will officially make the $SPX chart "bullish."
After an ugly day on Thursday, August 7th, followed by a further decline of 13 $SPX points during the overnight session, stocks have rallied steadily. Most observers are saying that the correction is over and that the bulls are back in charge. That may be true, but the evidence is not completely in favor of the bulls, yet.
