An interesting take:
'The S&P 500 closed on Monday at 700 and even lower on Tuesday at 696, which confirmed a break in a line of support for the average that dates back to January 1997. Twelve-year lows have been broken only a few times and in the past have preceded a rally. In 1932 and again in December 1974 the markets broke a 12-year uptrend. The 1932 move was a bit ahead of a rally by a few months and in December 1974 it marked the bottom.
Tea leaf reading is just that, but occurrences from history should at least be noted. A lot of people are looking at the 680 level on the S&P 500 as it is a long-held line of resistance that was finally broken on the upside in 1996. Former resistance becomes support. Also, the 658 mark would be a 62% retracement of the rise from the August 1982 low to the 2007 high. That 62% retrenchment would be, I'm told, a classic Fibonacci retracement.
I have spent my career trying to get the fundamentals of investments right (despite being often wrong) but when fundamentals have turned murky and indecipherable, history and the technical might offer some clues. I offer the above in that spirit.
While the market has been hitting new lows, the number of stocks hitting new lows has stayed well below the mark seen last October, when the market temporarily bottomed at the much higher level of 840 on the S&P. Then 93% of stocks traded at new 52-week lows. The number of new lows recently has been around 20% of stocks. As we have been saying, divergences like this usually don't last.'