When volatility picks up, we watch the market's "internal" measures, like breadth, sentiment, leadership, and volume, to enhance our analysis of price action. These internal measures can give us a sense of when a trend in the market, either on the upside or downside, is overextended and primed for a reversal. In our work, we find it useful to use these data points in aggregate, taking note when several of these reach extreme levels. On Friday, there were seven internal measures that reached levels we identify as "extremely oversold" – one breadth metric, three sentiment indicators, two leadership measures, and one volume metric. The last time we saw seven internal measures reach extremes was May 12, 2022, ahead of a two-week relief rally. Importantly, the extremes marked a short-term low, but not the final low of the 2022 bear market cycle. One transactional measure of sentiment that we track is the CBOE Volatility Index (VIX) : The VIX tends to hold an inverse correlation with the S & P 500 Index (SPX) , with spikes occurring during equity market sell-offs. A VIX spike is currently underway, evident on the monthly bar chart, in an indication that investors are extremely fearful. This is also indicated by investor polls, noting the spread between bulls and bears on the weekly American Association for Institutional Investor (AAII) survey is at historically oversold levels. Sentiment is a contrarian indicator, meaning extreme fear is potentially short-term bullish for equities. We use oscillating measures of market breadth like the percentage of S & P 500 stocks above their 50-day MA to identify overextended moves: On Friday, the indicator fell decisively below 20%, which we view as an oversold extreme. The oversold condition is not bullish in and of itself, but taken within the context of extreme bearish sentiment, it is worth noting. With oscillators, in general, we like to see an upturn back into neutral territory as a positive catalyst. It is important to note that market internals are just one piece of the puzzle, and they can always become more oversold as the market declines. This is why it is prudent to view internals as supporting evidence and use price action and momentum for confirmation that a low is being established. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. 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