AN OVERSOLD S&P 500 IS TRYING TO STABILIZE AT ITS 200-DAY MOVING AVERAGE -- THE VIX INDEX IS PULLING BACK FROM RESISTANCE ABOVE THE 40 LEVEL FOR THE SECOND TIME THIS WEEK

S&P 500 IS TESTING ITS 200-DAY AVERAGE ... The downside correction that started a week ago pushed stock prices lower again today. But they're trying to stabilize in afternoon trading. Chart 1 shows the S&P 500 trying to find support at its 200-day moving average. The last time that support line was broken was the during the last correction that lasted from August 2015 to February 2016. Its 14-day RSI line (top of chart) has reached oversold territory below 30. The may provide some support along with the 200-day average. Stocks may also benefitting from a drop in the VIX Index.

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Chart 1

CBOE VOLATILITY INDEX CAN'T HOLD SECOND MOVE OVER 40... The 10-minute price bars in Chart 2 show the CBOE Volatility (VIX) Index falling in afternoon trading after briefly exceeding the 40 level for the second time this week (red circles). It's earlier move over that level on Tuesday was turned back and helped stabilize stock prices. It remains to be seen if that happens again. After this week's heavy losses, stocks (and stock holders) are due for some type of relief. Even after this correction finds a bottom, the market is going to need a healing period to repair technical damage and restore confidence. To paraphrase Winston Churchill, this may not be the beginning of the end of the current stock correction. But a rebound from here could be the end of its beginning. [Footnote: After the British victory in North Africa during World War 11, Churchill gave a speech in November 1942 in which he told the British people: "Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning".]

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Chart 2

WINSTON CHURCHILL'S SPEEC...