The S&P 500 is down 2.99% over the first two days of October, which is the index’s worst start to Q4 since 2009. In 2009 the S&P fell 3.01% over the first two days of October on concerns related to an unexpected decline in manufacturing and falling auto sales (sound familiar?). After that two-day drop, though, it went on to rally 8.77% from that point through the end of the year. Investors would certainly love a repeat of that action at this point. Below is a quick look at the S&P 500’s price chart. The recent highs made in mid-September represent a pretty significant double top at this point, and yesterday’s break below the 50-day moving average was a negative as well. Heading into today, it will be important for the S&P to hold the bottom of the multi-month uptrend channel that’s currently in place, but it’s not looking great in early trading as futures are down pre-market.
Below is a look at the selloff through our Trend Analyzer tool. As you can see, US index ETFs have really tanked over the last week, falling 3-5% across the board. Last week every one of the index ETFs we track were solidly above their 50-day moving averages, and now they’re all below their 50-DMAs and either near or at oversold levels.
Looking at sectors, only the three defensives (Consumer Staples, Real Estate, Utilities) remain above their 50-day moving averages, but even they have fallen within their ranges over the last week. Materials, Communication Services, Energy, and Health Care are the sectors that have already moved into oversold territory, with Health Care the most oversold at more than two standard deviations below its 50-DMA. Start a two-week free trial to Bespoke Premium to access our Trend Analyzer tool and our popular equity market research.