Heavy selling continues to engulf the market on most days. The next support level appears to be roughly in the 2580-2600 area, which is the closing lows of February and April earlier this year.
There is resistance at 2820, which is where last week's oversold rally stalled out -- far short of even the most basic target: the declining 20-day moving average. Another resistance point now looms as well: the 200-day Moving Average.
Equity-only put-call ratios are racing higher and thus remain on sell signals, although they are in oversold territory.
Market breadth continues to be abysmal. Both breadth oscillators remain on sell signals and are mired in deeply oversold territory. It would probably take two or three days of positive breadth to pull them out of these sell signals.
Volatility is rising and is in an uptrend. That is bearish for stocks. However, it's not rising very fast, and has not spiked up to extremes as it usually does.
In summary, the market has been badly wounded, and I think it is possible that an intermediate-term bear market has begun. As long as $SPX continues to trend lower, while below the 200-day Moving Average, I will stick to that opinion. But there are massive oversold conditions, many of which are poised to generate some short-term buy signals. If these buy signals can reverse the downtrend, so be it. I just have my doubts.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.