I realize in the last week I have gotten quite a bit into the weeds with my harping on that put/call ratio for the Volatility Index being so low for so many days.
It's just that when I see something that is so extreme and it occurs on consecutive days -- meaning it's not a one-off event -- it captures my attention. I figure anyone who is that persistent is worth paying attention to. Especially when it's something that hasn't happened in more than 12 years.
I suspect Wednesday's market reaction to the Fed is what that VIX call buyer was planning on as we saw the VIX go from 12 two days ago to 16 on Wednesday. So how did the market's internal statistics look in the downdraft? Actually, not nearly as bad as you might think.
Before we get to that, let's note the intermediate-term indicators are all still far from oversold. They got overbought mid-month, so it will take some time for them to cycle back to an oversold condition. The McClellan Summation Index turned down mid-month and never returned to the upside. It now needs a net differential of plus 1,100 advancers minus decliners on the New York Stock Exchange to halt the decline.
If and when it gets to the point where it needs plus 2,000 or more, I would consider the market stepping into short-term oversold territory.
The Volume Indicator also got overbought, when it tagged 56% mid-month. It is now at 52%. It gets oversold in the mid 40s.
The 30-day moving average of the advance/decline line got overbought mid-month, as well. It is far too soon to talk about when I might see this oversold since it would be weeks away.

None this means we need to collapse. Nor does it mean we need to go down every day. It is all referring to the point in time when we could, or should, reach what I term a "good" oversold condition.
Now for the good news. Yes there was good news during Wednesday's decline. Breadth. It acted just fine. The New York Stock Exchange saw a net loss of about 800 issues. That's with the S&P 500 down 33 points.
Compare those numbers to a week ago when the S&P was down 16 points and net breadth was minus 1,350. Perhaps Thursday will be even worse, but for the one day decline, breadth was not bad.
I have been harping about the number of stocks making new highs, because since June 21 we have not been able to exceed the previous peak reading of 323 new highs. Wednesday saw new highs on the NYSE notch up to 321, which is the highest reading since that June date. It's still shy of the peak reading, but it's the best we've seen in six weeks.
The number of stocks making new lows contracted. This is an indicator I have been harping on for weeks now, too, as the new lows on both Nasdaq and the NYSE have been climbing and their 10-day moving average has climbed as well. The NYSE had 50 new lows on Wednesday (vs. 79 on Tuesday) and Nasdaq had 78 (compared to 98 just two days ago).
These are all just one day readings, which can change tomorrow, but they are worth noting. It's a cycle in the market: We get overbought, we get complacent, the market sells off. Then we get oversold, the market gets too negative, and we set up for a rally. Wednesday's action will help wring out some of the recent complacency that built up.
Overbought/Oversold Oscilliators