The S&P 500 is falling toward its lowest close in a month, and the biggest two-day drop in six weeks, but market internals are still showing no signs of investor panic. The NYSE's Arms Index, a volume-weighted measure of market breadth many use as a sign of selling or buying intensity, tends to rise above 1.0 during broad market declines, as the volume in declining stocks rises relative to the number of declining stocks, as investors sell more aggressively the further a market declines. But on Wednesday, with the S&P 500 down 0.7% in afternoon trade, the Arms Index has slipped to 0.80, which suggests the minority of buyers are acting a little more aggressively than the majority of sellers. One Tuesday, when the S&P 500 slid 1.2%, the NYSE's Arms Index was a flat 1.0. In contrast, when the S&P 500 slumped 1.3% on Jan. 28, the Arms jumped to a more than three-year high of 3.57. Some technicians might view the recent low Arms reading as a sign of investor complacency, which suggests more selling could eventually emerge.
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