The stock market seemed to be under a great deal of pressure on Aug. 10. Important support for the S&P 500 index SPX, +0.99 at 2460 had just been broken, and it appeared that a test of much more major support at 2400 was going to unfold. But on Monday, Aug. 14, a very strong rally materialized, taking SPX back above 2460 and into its previous trading range (2460-2480). Simultaneously, a number of buy signals have occurred, including the VIX “spike peak” buy signal and the “VXST crossover” buy signal. I found it very surprising that the market was able to put the brakes on the correction so quickly. But one cannot ignore the indicators. The upward shift had left support at 2437 — the lows of last week. Now, we see that the market was just toying with everyone — as it is its job to do — and prices headed south in a strong way again. The support at 2437 was taken out, and the prospect of a test of the major support area at 2400 is back on the table. You can see from this first chart that the 2400 level has been important since early March, so if it were to be taken out, the entire picture would change to a bearish one.via