S&P 500 Struggles to Hold Key Support Level as Broad Market Weakness Persists

The S&P 500 is testing support at 4,200 and its 200-day moving average. This level was also tested in early October, leading to a rally. But now the index has fallen below this support.

Breadth indicators like new highs/new lows and breadth oscillators are very negative and remain on sell signals. This indicates broad market weakness.

The CBOE equity put/call ratio and VIX volatility index have given some contrarian buy signals recently. But other volatility measures remain negative.

There is a seasonal tendency for stocks to rally in the last week of October into early November. This could provide some relief given overwhelmingly negative sentiment.

New recommendation is to buy XLP on a close above 68.04 based on a volatility band buy signal. Stop loss would be on a close below the lower -4σ band.