They started selling the gap up right from the open. Quite a smack down. Breadth was -87%. New highs were very low at 11. New lows spiked up again to 746. The TRIN refuses to show any panic. It was merely 1.2 today. We blew through the retrace zone. This is a very important test of the Aug. low.
The futures got close to the 20 SMA overnight. The sellers wasted no time once the market opened. That was a very short lived bounce.
Here is a look at the advance/decline line and the cumulative volume index.
Both breadth and volume market internals are showing a leading downside divergences. While this does not guarantee SPX will break down it certainly makes the odds pretty high.
The VIX is only 25. SPX is almost back to the Aug. low when the VIX was over 50 intraday and closed at 40. Another sign of a lack of fear.
I heard Art Cashin talking about rumors of forced liquidations going on today. The price action sure looked like that was the case. That always adds a level of uncertainty. Are they done yet? We have had many, many signs we are already in a bear market. A number of important indexes have already gone through their Aug. lows. It seems inevitable SPX joins the party. However, we are very oversold in the short term so some bounce/consolidation may happen first. I can't think of a single pullback this big in this bull market with such a complete lack of any kind of fear. That is normally a good confirmation we are in a bear market.
I found this a very interesting read on China. China’s Strategy
Bob
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