The market has quickly become extremely oversold again, and thus
short-lived rallies are possible. In the bigger picture, bears see
a break of the recent uptrend dating back to early August. Bulls see
a successful retest of the lows. A move to new lows below 1100 will
prove the bears right; otherwise, the bulls still have a chance to rescue
The equity-only put-call ratios have been on buy signals for a few
weeks but they are beginning to weaken now.
Breadth indicators gave sell signals this past Monday, and are
now extremely oversold.
Volatility indices rose sharply again, remaining in a generally
bearish mode. Another spike peak buy signal would be short-term bullish.
In summary, the last two days have violated some important
technical levels, but they have also generated yet another severe
oversold condition. The next short-term rally may tell a lot about the
condition of the market. If it cannot carry beyond 1160, then the trend
is bearish, and we would look for a bottom sometime in October.