Archive for October, 2022


October 15th, 2022 Comments off
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The stock market had a sharp two-way response to the latest FED meeting. This created both a bull and bear trap for traders. But this latest one-day rally may prove to be a curse in that it relieved downside pressure and opens the way to continued downside action. Prices can certainly continue down rapidly in a short period of time. My guess is that there needs to be a clear sign of capitulation in order for a bottom to take place. This entire decline has been too orderly. The “blood” is still not on the street, even though it should be now. Also,the internal indicators below indicate that there is more room on the downside before the general market becomes short-term “oversold.”

Key underlying short-term timing indicators show the following:


NYSE McClellan Summation Index: This indicator is continuing its long downward move. In terms of time, this indicator should be bottoming and even reversing course soon. But first this indicator needs to “cluster” before changing direction. But this indicator suggests that after the cluster is finished, the market to turn to the upside for an extended period.

Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 21. But major bottoms have occurred around the reading of “2-5” so we are far from that. This indicator also confirms to me that this decline has been too orderly and is lacking the signs of “blood on the street” capitulation that is usually needed to reverse course on a down market of this magnitude.