Not much changed during Monday's decline in the market. Not in terms of the indicators, at least.
For example, let's begin with breadth. It was already droopy enough to have turned the McClellan Summation Index down almost a month ago. It's still heading down. But let's talk about Monday in particular.
On the New York Stock Exchange, net breadth was negative 1,340. The S&P lost 55 points. Just one week ago, last Tuesday, the S&P 500 was down a mere eight points, with net breadth at negative 960. So that 45-plus point additional decline gave us 400 more decliners than adavancers. Nope, not much selling there.
Let's check on volume, then. Sixty-five percent of the volume was on the downside on the NYSE on Monday. Last Tuesday, down volume amounted to 63%. Again, last week's statistics were worse than this week's.
OK, but what about Nasdaq? Last Tuesday Nasdaq was down 50 points on the day. Net breadth was net negative 1,640. Monday Nasdaq was down 190 and net breadth was negative 680. That's not even close to "more selling."
But it's volume on Nasdaq where it gets even more curious. Last week, on the aforementioned Tuesday, down volume on Nasdaq amounted to 60%. On a day, Nasdaq lost 50 points. This week Nasdaq lost 190 points and 65% of the volume was on the upside. Yes, the upside.
So basically there was more of the same in terms of the indicators, with the majority of stocks down, but not a lot of real selling.
What has changed is the channel in the Russell 2000 that was broken last week. But what about the S&P? Just prior to my time off, I drew in this black line on the chart of the S&P. If you squint hard enough the line was broken during the morning hours, but in reality, it was really just another touch of the line for now.
Or, I can draw in the blue line, which is flatter. Either way, it's doubtful we'll get much panic as long as this support area holds. That's no different than what I said two weeks ago.
Sure, the Transports haven't done anything for the last eight weeks, but even they haven't broken support. Not yet.
Or what about those beloved Industrials that I have noted time and again everyone seems to love but they don't go up. Like the Transports, they have gone nowhere for eight weeks, but still they have not broken.
In other words, the indexes finally sold off, but they were just catching up to the dripping that has been going on underneath. The action is sloppy, but it wasn't enough to get folks panicked. It's like jumping over a puddle and you don't quite make it -- your heel lands in the water -- but at least your entire foot didn't get wet.
I would not be surprised to see another rally attempt this week but it won't change the fact that I think the month of January brings us a proper correction.