NEW YORK (TheStreet) -- This week has been highlighted by intense volatility and more conviction, as seen in the volume, on down days than up days.Equity markets have witnessed bargain hunters come in and buy on dips in the past. But with the worsening global picture, this phenomenon looks to have subsided. This means that falling price action is more pronounced, and prices close lower at the end of sessions, absent bottom feeders scooping up the carnage. Equity traders are spooked by the rout commodities have been taking, signaling that the global economic picture cannot get by on merely optimism any longer. Oil, gold and copper have all taken beatings this week due to weak data coming from China and the United States, and intermarket charts are showing that equity is finally taking the hint.
Since May the equity picture looks to have deteriorated. Although not seen in a pullback of actual indexes, it does explain the heavy volume on down days viewed recently. The ratio is on the verge of a breakout lower, finally taking into consideration all the macro variables and poor earnings data. Look for equity to take its lead from this breadth indicator.