The market, as measured by the Standard & Poors 500 Index ($SPX), had been laboring at new highs, near 2120. Then, last Friday it broke down below support at 2090, which turned the chart bearish.
Equity-only put ratios curled upwards late last week and gave
confirmed sell signal. See below.
Volatility indices only rose modestly during this latest selloff. However, $VIX did close above 16 and thereby established a budding uptrend (red line on $VIX chart, Figure 4). An uptrend in $VIX is bearish for stocks, so this indicator is rated as a “sell” now.
In summary, the picture became bearish when $SPX broke below 2090. But the outlook is mixed now, with some indicators on sells and some on buys. A close above 2090 would be a bullish development, while a violation of this week’s lows (2040) would be bearish.