We had some very interesting action today. The indices averaged about a 2% drop on the back of a much better than expected ISM Services report. That’s not what the bulls want to see. Despite the large percentage drops, only the Nasdaq had an increase in volume. And even that increse only took volume up to the average level. So things may not have been as bad as they looked. The VIX is starting to show a bit of fear, but I think the lack of volume today still shows a lot of complacency.
The S&P 500 actually broke down out of its 2 month long trading range today, on a closing basis. It’s still 3 points above the intraday low though. The S&P is now sitting just 0.19% above its May high. So the ‘sell in May and go away’ mantra may still be proven correct for that index. The Dow is at the bottom of its range and the NASDAQ is close to the middle of its June-July range. But that NASDAQ chart is looking really toppy all of a sudden. It’s broken its trendline for the first time since April. I still think we need more volume in order to make any conclusions about this market.
