When considering indicators, those that measure fear or capitulation are simply not registering the kind of extremes seen around market bottoms. The VIX has moved higher but it hasn’t spiked in a substantial way. The VIX:VXV ratio just poked above 1 for the first time in a while on Tuesday. Ratios of 1.1 or higher have more often been seen near bottoms. New lows have risen but are not even close to the levels seen in July. The CBI is at a paltry 3. The McClellan Oscillator is not near overdone. The percent of stocks trading above their 40-day moving average is over 40%. Near the July bottom it dipped below 10%.

Of course most indices are still North of the July bottom. Therefore, you would expect the breadth, fear, and capitulation indicators to be less extreme than in July. Still, without evidence of a washout in progress, I have little inclination to step in front of this market and start buying.

The price action isn’t providing much in that way of clues either. Much of what I’m seeing is nearly unprecedented. I looked for other times the S&P made 2% in one day and then saw those gains completely wiped out the next. It’s only happened twice before: 3/24/03 and 6/6/08. If I loosen the requirement to a 1.5% rise, then there are 16 occurrences. Unfortunately, trading after these instances was mixed and choppy with little discernable edge. I also looked at performance following drops of 3% or more in the S&P. Again, mixed results.