S&P 500 (SPX): breadth improving, volume weak
Market breadth and price on the S&P 500 (SPX) show a small break in the very near-term trend. The index still holds the long-term trend at trend-line support from the summer lows and some longer-term moving averages.
Breadth is getting better under the surface. The share of S&P 500 stocks above their 50-day moving average has risen back to 47%. The share above their 200-day moving average has climbed to 53%, after hitting the lowest level since the April 2025 correction.
These levels are holding on very low volume. Using trading volume in a widely followed S&P 500-linked ETF (SPY) as a proxy for how many people are taking part, that volume sits at historically depressed levels. Low participation gives a technician little confidence the levels will hold in the near term.
A test of the 100-day moving average this week looks likely; it sits just below current prices around 7,600. If that level breaks, the next longer-term support is near the 200-day, close to the former summer lows around 7,300.
Tech is the group to watch. More weakness in tech could turn this quiet, under-the-surface "stealth" correction into a price-based correction, pulling the index down toward the larger number of its stocks. Near-term rotation back into tech could instead carry the index to new all-time highs soon.
What is driving the low volume?
Several factors weigh on volume. Seasonal rotation is one, and this is normally a weak part of the year, so current action follows typical seasonal patterns. A midterm election cycle adds to it. The quiet Q4 calendar carries many possible catalysts for volatility: central bank action, midterm elections, and bond yield moves. This light volume often comes before a possible historical year-end rally, with rotation happening beneath the surface.
Russell 2000 (RUT): testing historic support
Small caps show the damage from this rotation. The Russell 2000 (RUT) entered a technical correction last week, then got some relief when yields pulled back.
On the short one-year daily chart, price sits at polarity levels of former highs and holds that near-term support. On a wider 10-year weekly chart covering past cycles and larger corrective periods, the Russell 2000's 42-week moving average - roughly the same as the 200-day moving average - has acted as support in stronger markets. The chart arrows show buyers step in at that area during healthy markets and buy the weakness for mean reversion (a bounce back toward the average).
A potential death cross is also showing. A death cross happens when the 4-week simple moving average (roughly the 20-day) crosses below the longer-term 42-week (the 200-day). Historically these death crosses have come during deteriorating trend conditions and larger drawdowns in the index and the overall market.
Last week's weekly candlestick tested both support levels. This week a death cross is forming intra-week. Technicians are watching these levels closely to see where the week closes and how price acts in coming weeks, which will show whether the longer-term support holds or the trend keeps weakening.
