Forewarning: This note will take two minutes to read as a lot has happened since yesterday's move lower:
- The Dow Jones Industrial Average recorded its 10th consecutive down day.
- The S&P 500 has experienced 13 straight days with more decliners than advancers.
- The S&P 500 saw a spike in 1-month new lows to 60%, the highest level since March 2023.
- The percentage of S&P 500 stocks in oversold conditions increased to 29.5%, reaching its highest level since October 2023.
- The percentage of stocks above their 50-day moving average dropped to 18.3%, the lowest level since November 2023.
However, one data point that caught my attention was that over 97% of stocks in the S&P 1500 declined in price yesterday!
Here is the table:
(right-click and open image in new tab to zoom in)
The Takeaway: Yesterday morning, I pointed out that the environment was undergoing change, and with the market price action we saw at the close has now confirmed this shift in the environment.
This was the largest selling wave of the year, with 1,467 out of 1,502 stocks in the S&P 1500 declining on the day.
Here is the breakdown by S&P size:
- 483 stocks in the S&P 500 experienced declines, marking the highest level since December 2023.
- 396 stocks in the S&P 400 were down, and 590 stocks in the S&P 600 also fell, both reaching their highest levels since 2011.
This doesn't necessarily mean we are entering a bear market, as bear markets are rare. But we should prepare for further weakness if the bulls cannot regain control.
A short-term correction at this point would not be surprising. That said, when humans are involved, a bear market can never be completely ruled out.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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