By Lawrence G. McMillan
The S&P 500 index continues to decline, although there have been volatile days in both directions. On Wednesday, for example, it started off with a 60-point loss, only to recover 110 points from those lows with a matter of hours.
But the SPX /zigman2/quotes/210599714/realtime SPX -2.27% chart shows a pattern of lower highs and lower lows (downtrend lines marked in blue on the accompanying chart), and that is the dominant feature. There are many crosscurrents and conflicts among the individual indicators, as we shall see in this report, but with the SPX chart in a downtrend, our outlook is at least short-term bearish unless that downtrend is broken.
As examples of conflicting indicators, the McMillan Volatility Band (MVB) buy signal that occurred on Sept. 22 is still in place, while the realized volatility sell signal, based on the S&P’s 20-day historical volatility (HV20) is also still in effect.