The stock market has been down 8 consecutive trading sessions.
What's even more surprising is how its done it.
Slow and steady. In years past eight straight days of declines for the indices would spell a 7-10% collapse for prices. Sure we've seen a host of stocks plummet significantly over the last two weeks, but overall, the market still sits within striking distance of making new all time highs before the year is out.
And if we've learned anything the last 7 years since the financial crisis, its that the price recoviers can be both swift and dramatic. Look no further than the Brexit collapse earlier this year. The $SPY dropped to $198, less than a month later it was over $215.
and at the Brexit lows, not many were looking for a bounce, let alone a move to new record highs. We got both.
With the most recent sell-off stocks are just slowly circling the drain, while the 'fear' index, or the uncertainty index as I like to call it, is on the cusp of a historic move.
Sentiment continues to be bearish. And more often than not, the more bearish market participants become the closer we are to a sharp reversal.
Back at the 2016 lows at the start of the year, this $SPY Stocktwits.com sentiment hit 24% bull 76% bear. A reading never seen before. With the $SPY board littered with bearish perspectives, the market rocketed higher to new, never seen before prices.
The question today is.... is the market going to rebound. After 8 straight negative sessions, will the market rest on the 9th?
The clear leaders of this decline, the Volatility index and small caps, will give excellent insight into a possible reversal for this market.
The VIX was ramping higher all day yesterday surging over the key 20 level. The market was chopping around, but ultimately succumbed to this bearish signal hitting session lows late in the trading day.
This morning, after the jobs report, the VIX was painted with a sub 20 reading. We've seen this before and more often than not prices end up hitting these peculiar paints.
The $VXX is lower for the first morning in quite a while. Keep an eye on the $VXX intra-day. If it remains weak, look for the market to gain some positive momentum. A green close you say?
Nothing is certain. And with all this election uncertainty who is to say another giant headline doesnt hit later this afternoon, just like last Friday, and take the market to it's lowest levels since the start of the summer.
Prices continue to roll over and negative momentum still persists. We had mixed signals yesterday as well, but ultimately the VIX won again. Today I think the VIX will lead us, with $IWM close behind. If that fat finger 19 print on the VIX gets hit later today, as I think it may, asbent another election Friday bombshell, we could see $SPY $210 before the closing bell.
See you in the chat room! And have a great weekend.