If market fundamentals aren't inspiring you on Monday morning, the technicals aren't likely to help. Mary Ann Bartels, head of U.S. technical analysis at Bank of America, noted that the S&P 500 is giving the important 1200-level a test, and any break below that threshold could mean more declines ahead. Uh-oh: In early trading, the index was down 1.9 per cent, to 1192.
Ms. Bartels believes that any "decisive" move below 1200 could mean bring a lower target of 1150 to 1100 for the S&P 500, with a risk of falling to its October low of 1074.
"Our tail risk of a European meltdown would point to a test of 985-935, but we have this as a 50 per cent probability," she said in a note. Right now, those fifty-fifty odds probably aren't bringing much comfort.
Stocks have certainly been turning heads in recent action. They rose 17 per cent in October, from the month's low to the month's high, marking one of the best months on record as stocks recovered from an earlier bear-market selloff. However, they have since slid a total of 7.2 per cent from that near-term high.
Some observers, including Ms. Bartels, had been concerned that those strong gains in October had come with relatively light volume, signalling a lack of conviction among investors. However, in another worrisome sign, Ms. Bartels noted that trading volume expanded during last week's sharp downturns.
David Berman