The Standard and Poors 500 index (SPX) closed today at 4320, down ten points on the day or -0.2%. SPX opened the week at 4445 for a weekly loss of 2.8%. SPX broke down through its 50-day moving average (dma) last week and fell farther this week, leaving the index about midway between the 50 dma and the 200 dma. Trading volume remains well below average.

VIX, the volatility index for the S&P 500 options, closed today at 17.2%, down slightly from yesterday’s 17.5%. VIX remains below the volatility spike  around 18-19% during the mid-August correction, even though SPX broke those 
mid-August lows yesterday.

I track the Russell 2000 index with the IWM ETF, which closed today at 177, down about one half of one point or -0.2%. IWM opened the week at 184 for a loss of 3.6% for the week. IWM broke down through its 50 dma two weeks ago and broke down through its 200 dma early this week. IWM is now more than halfway down from its 7/31 high to its low of 2022.

The NASDAQ Composite index closed today at 13,212, down 12 points or 
-0.09% today, and losing 3.4% for the week. NASDAQ broke down through its 
50 dma last week but is now closing the gap to its 200 dma. NASDAQ found support today at its high from 2022.

The broad market context for the past several weeks isn’t pretty. It would be easy to be concerned that we are setting up for a more serious market correction and October is an infamous month for ugly corrections. As one might expect, Wall Street doomsday gurus are on every financial network. All three broad market indices have posted weekly losses over three consecutive weeks and are consistently below their 50-day averages. The worst chart belongs to Russell, which broke down through its 200 dma this week.

Conventional wisdom expected the FOMC to pause its rate hikes this month and I expected the market to react positively when it did pause. Instead, the market took significant steps lower. The relatively low levels of trading volume provide the only glimmer of hope.

This is a good time to be in cash.