In today’s Traders Exclusive, George Tkaczuk reviews the action in equity markets heading into the end of September. The volatility in the market has continued to increase over the last few weeks, with sellers gradually gaining the upper hand. This morning, the market gapped lower, but gained some momentum to the upside heading into lunch, possibly setting up a reversal as a number of indicators suggest we may be nearing a short-term bottom. Overall, there are a lot of mixed signals to keep track of for further clarity. We are watching the S&P for support right around 1,976, a level that the index has flirted around for a number of days. A failure to hold this level on higher volume may lead to 1,900. The Nasdaq has support at 4,485, which it has tried to rally off but also on low volume. The Russell 2000 tested it’s support in the 1,110 area which is where the lows held in August, and we are waiting to see a sign of reversal here. The percentage of NYSE stocks above their 200-day moving average dropped to 51%, which is the area that corrections have bottomed over the last two years. The percentage of NYSE stocks above their 50-day moving average fell to 29%, which is also in line with market lows over the last two years. It’s never advisable to front-run a reversal, but we are cognizant of these possibly contrarian indicators.
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