The recent stock market action is of no real help in determining whether this is a painful but brief correction or the opening phase of a longer, deeper downturn.
The oppressive selling interrupted by flawed and fleeting rallies, the widespread damage to the majority of stocks far exceeding the S&P 500 index's 9.8 percent drop, the refusal of investors to take heart in cosmetically upbeat corporate results — all of it is equally plausible as a passing scare or an ominous emergence of the bear.
The market is riding the line between a fairly routine reset in valuations and expectations, and a deeper rout that would challenge the consensus assumption of solid U.S. economic growth moderating benignly next year.
The uptrend in the S&P 500 since February 2016 is now bending or cracking, depending on the interpretation. That February 2016 low was the end of a "stealth bear market" that gouged some 12 percent from the S&P 500 while inflicting worse damage on industrial stocks and foreign indexes — on multiple waves over the course of six months.
The Nasdaq-100 index — a proxy for the mega-cap growth stocks that carried the market until they faltered recently — is sitting on an even longer uptrend line from the March 2009 low.
The carnage has been pretty comprehensive: More than three-quarters of all S&P 500 stocks are down more than 10 percent, and nearly half are at least 20 percent off their high. In the broader S&P 1500 index, a majority of stocks has lost at least a fifth of their value.
Other ways of viewing the market also show it to be flashing "oversold" extremes, including Daily Sentiment Index readings for the S&P 500 that got below 10 percent last week, a sign that fear had replaced hope for more than 90 percent of tactical traders.