We now have almost 1600 stocks undergoing strong distribution or 22% of our sample.

S&P 500 Sector analysis --

The chart below shows a summary for several technical indicators by sector in the S&P 500 index.


Except for energy, there is increasing weakness across all the sectors. Even Technology has taken a turn for the worse. Though tech has weakened it has still held more strength than Industrials and Materials which have declined markedly over the last few weeks.

Conclusion --

Technically speaking, things are as bad, if not worse, than they were at the March lows. Does this mean we are about due for some kind of a rally?

As of the end of last week, our measures showed stocks heading steadily down with no signs of bottoming. This argues for continued pain as the market tries to find a solid footing from which to rally.

On the other hand, some of these numbers show that there aren't many stocks left to turn down and that those stocks that have already turned down have dropped quite a bit. This means we are in oversold territory. As previous weeks have shown, though, a market can always get even more oversold.

I have learned to restrain myself when making predictions based on the data presented here. I will limit myself now to saying that if we don't see a bounce pretty soon, the situation could turn truly ugly and the feared "second leg down" may be upon us.