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The Standard and Poor’s 500 Index (SPX) looked weak last week, but it really fell out of bed this week. SPX opened the week at 3441, broke the 50-day moving average (dma) on Monday, and then gapped open lower on Wednesday. Thursday looked better, but today’s trading took us even farther down, closing at 3270, down 1.2% today and down 5% for the week. SPX found support today at 3234, near the high from June 8th. SPX bounced from there, recovering 36 points of today’s loss. That recovery gave the bulls something to cling to. Trading volume on SPX has been running consistently below average until Wednesday this week, and volume remained well above the 50 dma the balance of the week.

The volatility index for the S&P 500 options, VIX, closed today at 38% after opening at 41% this morning. VIX began the week at 29%, so it was quite a ride. Today’s decline gives the bulls some hope, but not much. This is close to if not at the “all in cash” level.

IWM, the ETF based on the Russell 2000 group of companies, resisted the downward trend last week and even to some degree on Monday and Tuesday, but IWM gave way on Wednesday, finally closing today at 153.09, down 1.3% for today and down 4.9% for the week. The low today at 151.39 was very close to the close on June 8th at 151.99. IWM recovered much of today’s losses, similar to the pattern observed in the S&P 500.

The NASDAQ Composite index has been trading steadily lower since October 13th, unlike SPX and RUT that seemed to resist the downward push until this week. NASDAQ closed today at 10,912, down 2.5% on the day and down 4.6% for the week. Surprisingly, NASDAQ’s trading volume barely reached the 50 dma today and didn’t spike much above average on Wednesday’s big drop. NASDAQ did not recover much of its losses today before the close, unlike SPX and IWM.

In summary, all of the broad market indices are screaming bear market this week. The small to mid-cap stocks of IWM and the Russell 2000 index are signaling “risk off”. The only bright spot to be found was the recovery from today’s lows before the close. But that may be grasping at straws.

The move today of IBD’s market assessment moved from Confirmed Uptrend to Market In Correction reinforces the seriousness of this bear market.

The conventional wisdom is that the market is spooked by the prospect of more economic closures in the states. But one has to believe that the upcoming election also has people taking risk off the table. That leaves us with the bottom line: How will the election result Tuesday affect the market?

The most prudent action is to sit on the sidelines and watch. In last week’s newsletter, I opined that it wasn’t a bad time to be largely in cash. I have changed my mind. Go to 100% cash on Monday if you aren’t there already.