Stocks broke below the December 2018 lows this week, which was a support area that many had expected to hold. This market has blown through every supposed support area there was. The decline held at 2280. The 2280 level was last seen in February 2017. So in a matter of three weeks, the market has wiped out three years worth of gains.
Bear markets move fast, but this is one of the fastest of them all -- on the order of the most volatile markets of all time, 1931-1933.
I hope that's the ONLY parallel with that time period. Equity-only put-call ratios remain on sell signals, as they continue to race higher. They are now reaching or exceeding the heights reached in December 2018.
Market breadth has been swinging wildly back and forth, The breadth oscillators remain on sell signals, but are very oversold.
The major trend of $VIX remains higher, although one wonders if $VIX can really go too much higher. There is a spike peak on the $VIX chart, which is a buy signal that doesn't seem to be having much effect.
In summary, the market is tentatively trying to get to the point where it can start an oversold rally. We have a number of short- term bullish indicators. However the main trend of the market remains bearish, since we do not have buy signals from any of our intermediate-term indicators. So, we are still maintaining a "core" bearish position, but will trade the short-term bullish signals around it.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.