The selling on the Nasdaq exchange is certainly broad-based and heavy, as the Nasdaq Composite COMP, -3.74% sinks 2.5%, but the Nasdaq Arms Index suggests sellers are fairly cool and collected. The Arms is a volume-weighted breadth measure that tends to rise above zero during down markets, as sellers often disproportionately focus on declining stocks. Many believe a rise above 2.000 in the Arms depicts panic-like behavior. For example, when the Nasdaq Composite tumbled 2.3% on Jan. 25, the Arms rose to 1.760; the last close above 2.000 was Dec. 7, 2018 when it closed at 2.200 and the Nasdaq Comp dropped 3.1%. Currently, the Arms is up to just 1.069; on Jan. 26, when the Nasdaq Comp rose less than 0.1%, the Arms was at 1.08. Currently, the number of declining stocks on the Nasdaq outnumbered advancers by 3.63 to 1, and volume in declining stocks outpaced advancing volume by 3.88 to 1.
