All of the American indices have closed deeply lower yesterday as intense selling pressure continued to be ever-present in those markets. Not one index was left unharmed as each index broke their respective support levels as the market scope deteriorated even further.

With the current situation with the charts and market breadth, the near-term outlook clearly is pointing towards the “Neutral/Negative” direction. However, a bit of good news, the data is strongly suggesting that the recent bombardment of stocks has hit an extremely low level coincident with prior market bottoms that have historically proved to be buying opportunities.

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On the charts, all of the indices closed notably below their respective short-term support levels on higher volume and terrible internal extent. So, as of the close, there hasn’t been any evidence that the tide has turned to a more encouraging message. However, one contrarian indicator suggests the selling may be reaching a climax.

The % of SPX stocks trading above their 50 DMAs has shrunk down to only 13.7%. While one may think this a negative, it is, in fact, a level seen at market bottoms due to the intensity of the selling. The current level was registered at the market lows of January and February of this year.

While the data suggests a buying opportunity is unfolding, the charts and market breadth have yet to send signals that would confirm. Until that happens, the near term “neutral/negative” outlook for the major equity indices stays in place.