Detecting SPX Declines
CMT Association, Inc.
Advancing the discipline of technical analysis for nearly 50 years
1/?Looking Underneath the Surface
The 200-day moving average bounce at the beginning of October could not close the bearish gap that occurred on September 20th.?
Price has now turned south again, crossing below the 4350 level, which was a former resistance.
One signal that helps explain why this bounce was not very strong is by observing market internals.
The percentage of index participants remaining above the 200-day, 50-day, and 20-day moving averages is currently below 50% and trending downward.
Bulls want to see broadening participation to reassert control. Until then, the bias is sideways, at best.
2/ Volatility Increase
The VIX Index has been increasing since the middle of September, breaking out a downward-sloping trendline to close at almost 20 points.
?This indicates a certain amount of volatility but nothing extreme yet. The market needs the volatility to remain under this level to reduce the likelihood of increased selling pressure.
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