S&P 500

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Source: TC2000

The chart of the Nasdaq Composite also shows that the primary downtrend remains intact. As price recently rolled off of that resistance level, you can also see that the intermediate-term uptrend has been broken in the indicators have been leading the price lower. Unless we see a break above the upper trend line in the near future, there is a high probability that the March and July lows will be tested.

Nasdaq Composite

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Source: TC2000

In most cases, it is a small-cap sector that leads the economy, and the market, out of a bear-market trend. You can see that it appeared that the small-caps were going to make a move to break the primary downtrend when they moved up 13.5% from the July lows. However, it now appears that that move is over, as the sharp "V" move appears to be forming a double top from an intermediate-term basis, and my indicators are pointing to lower prices in the future.

If the price breaks below the 380 level, the July lows have a high chance of being tested. The only thing that would change that view would be a strong break above 400 on heavy volume.

S&P Small-Cap 600

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Source: TC2000

I know many of my readers like to know where the Percent of Stocks Above the 40-day Moving Average indicator is pointing. Currently, it is nearing the danger zone and is far from the low-risk buying area. Although this indicator is below an extreme level, it is still pointing to an increased risk level in the market.

Percentage of Stocks Above 40-Day Moving Average

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Source: TC2000