The NYSE’s Arms Index, a volume-weighted breadth measure, is showing signs of panic-like selling behavior as the S&P 500 falls into bear-market territory. The Arms compares the ratio of advancing stocks to declining stocks to the ratio of advancing volume to declining volume, to depict the intensity of the buying and selling into advancing and declining stocks. The Arms Index tends to rise above 1.000 when stocks fall, as selling in declining stocks tends to intensify. Many Arms followers believes reading above 2.000 depict panic selling. The Arms was a 2.388 in morning trading as the S&P 500 tumbled 3.2% toward a 15-month low. The NYSE Arms close above 2.000 was June 9, when it fell 2.4% (and 2.9% the next day). Before that, the NYSE Arms closed at 3.16 on May 18, when it slumped 4.0% (it fell 0.6% the next day). The NYSE Arms was so high Monday because declining stocks outnumbered advancers by a 29.4-to-1 margin, while declining volume outnumbered advancing volume by a 70.2-to-1 margin.
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