The S&P 500 stock index retests October low for the third time. It is only 1.2% above the February and April low, but so far holding the line.
We would expect to see some potential buying support at these levels again. In fact, we’ve already observed some positive reversal today from lower levels. At one point the S&P 500 was down nearly -2% and has reversed back up to near positive. If the lower prices continue to attract buying interest and the current intraday trend continues it could close positive.
I pointed out earlier in the year the rising implied volatility indicated by the CBOE S&P 500 Volatility Index was expecting a volatility expansion. The VIX correctly predicted a volatility expansion in 2018.
At this point, the Technology, Communication Services, and Materials sectors have turned positive for the day.
Three sectors that have trended above their April lows are Technolgy, Healthcare, and Consumer Discretionary.
The bottom line is when stocks reach a low enough point to attract new buying demand that overwhelms selling pressure, we’ll see the stock market trend back up. We should soon see if the stock market trends down well below its prior lows into a potential bear market level or reverses back up to continue its longer-term uptrend.
The direction of the trend conveys the truth.
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