VIX CLOSES AT HIGHEST LEVEL IN TWO YEARS -- S&P 500 FALLS BELOW ITS 200-DAY AVERAGE --- FIVE MORE SECTORS FELL BELOW THEIR 200-DAY LINES -- THAT PUTS EIGHT SECTORS IN DOWNTRENDS

VIX CLOSES AT HIGHEST LEVEL IN TWO YEARS... Stocks sold off hard again today with more 200-day moving averages being broken.  The inability of stock indexes to offer any buying near those long-term support lines is a very discouraging sign.  So was today's large jump in the CBOE Volatility (VIX) Index.  The daily bars in Chart 1 show the VIX jumping 11 points (42%) today to close at 39 which is its highest reading in two years.  That puts the "fear gauge" higher than its peak reached at the end of 2018 when stocks were down nearly 20%.  The only encouraging sign is the fact that its 14-day RSI line has reached extremely overbought territory at 86.  Today's upside breakout in the VIX, however, is another sign that the current stock selloff hasn't reached bottom and has more room to drop.

S&P 500 CLOSES BELOW ITS 200-DAY AVERAGE... The 200-day moving average is considered to be a long-term support line that often provides support during market selloffs.   During this decline, however, 200-day lines are failing that test.   Chart 2 shows the S&P 500 closing well below its 200-day line today in pretty decisive fashion (despite an oversold RSI reading of 20).  The Dow has closed below that line for three days in a row.  That suggests that the stock selloff has more to go.  The SPX has also fallen below previous peaks formed during July and September.  When a stock selloff fails to find support near the top of a previous trading range, it often falls to the bottom of that same range.  That would put the next potential downside target for the SPX at its October/August intra-day lows ranging from 2855 to 2822.   [See horizontal trendlines].  On a closing basis, the SPX has now lost -12% from its February high which puts it in correction territory (more than -10%). A drop to those lower levels would represent losses in the 14-16% range. The Dow and Nasdaq are also in correction territory.  A lot of other 200-day lines have been broken.

FIVE MORE SECTOR SPDRS HAVE BROKEN THEIR RED LINES...No less than five sector SPDRs fell below their 200-day lines today.  That makes a total of eight sectors trading below that long-term support line.  Chart 3 shows the Consumer Discretionary SPDR (XLY) plunging below its red line today and in heavy trading.  Short-term oversold readings on daily oscillators don't seem to be helping.  The four other SPDRs falling below their red lines today were communication services, consumer staples, financials, and real estate.    And that doesn't include market groups that have plunged below their red support lines like transports, small and midsize stock indexes.    The stock market is a market of stocks and sectors.   With their 200-day lines broken, most of them are now in downtrends.