S&P Pressure Gauge Swings Toward Selling, Suggests Pain to ComeBy
While U.S. stocks may have finished higher Monday, the pressure to sell still dominates the market, according to a key technical gauge.
As the S&P 500 posted its worst weekly performance since 2016 last week, the index’s DVAN trend line -- a "divergence analysis" which measures the current buying or selling pressure -- has turned appreciably downward for the first time in two years.
The bigger the divergence between the S&P’s price and the trend line, the stronger the negative pressure. A wider gap also signals that there is more volatility and downside to follow.
The last time the index broke this far through the baseline was in January 2016, when it proceeded to plunge more than 10 percent in the following month and a half. The S&P 500 has fallen 5.9 percent in February.
— With assistance by Kenneth Sexton