A Tale of 4 Indices

For some the S&P is the only index that matters.  Others take the mantle for the Q.   Occasionally the NYSE gets thrown into the mix.  When assessing risk tolerance the Russell tends to take the spotlight.  Some will say it's not about the indices, it's all about stocks, then bring up support and resistance levels on the indices and map out price points with little to no sense of irony.  There are times when I vacillate between viewing the indices as useful, actionable information, and times when I think they are not at all useful.


Recently there were two interesting tidbits I came across which I thought were useful and actionable information.  One is from @ukarlewitz on the Twits who posted the following. 

Analysis from @ukarlewitz

Another useful piece of information regarding breaking down market sell offs.  Market Sell Off Analysis from Alpha Architect.

When markets begin to sell off one of the first things I do is put up on a percentage basis where key levels are from the highs.  Knowing the frequencies of sell offs and the probability of them dragging an index down between 5 to 20 percent can help as a guidepost for zones where settling may occur and potential reversals begin to take root.  Upon looking at four heavily followed indices, what I noted is that on two of them, the NYSE and IWM, I have not had to adjust these levels since early 2018 for the NYSE and mid 2018 for the IWM.  Whether this in and of itself is useful or actionable is in the eye of the beholder.

SPY

COMPQ

NYSE

IWM