The internals do not paint a clear picture of last weeks price swings (Click on the image to read more about the A/D Line and Breadth). With a fake out to the upside mid-week, the bears finished the week on top. Economic news was grim as news of the federal government taking over Citigroup along with a weaker than expected fourth quarter GDP of -6.2% on Friday sent stocks lower.
As we continue making these new lows, the VIX (Volatility Index) is remaining steady with no major price swings. It seems that investors are not in all out panic mode day-to-day and rather accepted the markets slow grind lower.While we haven’t seen a strong rally OR panic sell that we have been discussing, one of the two on its way here in the week or weeks to come.
As we wrote about on February 18th, we are in an area with very little support, looking back 12 years to even find a point where the SPX was at these levels. Straight lines (moves higher without consolidation) don’t make for good support levels so we may not see a significant support level until the S/P 650 area.
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