Something else worth noting is the acceleration of volume on down days. This doesn't portend well either as it demonstrates investors rushing to the exits all at the same time. A healthy correction during a bull market should see declining volume on the down days. What we're seeing on the S&P is exactly the opposite. As the RSI and MACD are nearing support, I would expect a bit more weakness and then a bounce to work off some of these oversold levels before resuming the downtrend.
First, volume is atrocious. As stated above, volume should be rising during healthy bull markets. What we see above is that volume has fallen to less than half of what it was 5 years ago and roughly equal to what it was in 2005. Hardly a sign of broad market participation.
Second, I'm seeing an ugly parallel between 2007 and today. In fact, I'm seeing this in all of the major markets. Look at the monthly MACD in late 2007. I've circled where the 50 month crossed below the 200 month. Then look at the S&P above. See how the negative crossover occurred right after the S&P suffered two consecutive down months? Now look at the S&P today. We're on pace for the 2nd consecutive down month and look what the MACD is about to do. Hmmmmmmmm...
The same observation I noted on the long-term S&P chart applies here as well. The monthly MACD experienced a negative cross after two consecutive down months in late 2007 and the same thing is setting up today. We all know what happened in 2008 so caution is greatly advised here.
Remember the old saying: Markets take the stairs on the way up but they take the elevator on the way down.