With 3 hours of trading left today the S&P 500 finds itself back at the same level it traded at two years ago and down about 17% from the May 2015 high. Scary as this sounds, with today’s action stocks will move further into oversold territory, which will increase the likelihood that this phase of the decline is behind us.
In the four charts below we highlight various technical indicators that suggests stocks are due for at least a multi-day/week bounce (importantly these are as of yesterday’s close and will look more oversold after today).
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- The percent of stocks trading above their own 65-day moving average is about as low as it has gotten outside of 2008
- The percent of stocks making new 65-day lows in price has spiked levels similar to other tactical lows
- 54% of stocks are in a bear market already, which is just shy of 2011 levels
- The average stock is 24% lower than its 200-day high, which is also just shy of 2011 levels
While the presence of a large bankruptcy is oddly nonexistent (an event which usually coincides with market lowers and rampant fear) calling into question whether we’ve seen THE low, stocks at this point have reached oversold levels usually consistent with at least tactical lows.