Technically the market is clearly under duress. After failing
to clear key resistance at the 200-day moving average (DMA), stocks fell
through old support at the February 24 intraday low on the day Russia invaded
Ukraine. Last week we broke below the 50 DMA. Today we danced with the old
March 2021 low support levels around DJIA 31000 and S&P 3900. NASDAQ is already
through that support level. This brings the June lows into play as warned at
the end of last month to our newsletter subscribers before the big Powell
Jackson Hole speech drop: “September Outlook:
Not Out of the Woods Yet.“
On top of this technical breakdown, today we logged a third
Down Friday/Down Monday* in a row – and the 12th of 2022. This is
not a sign of a healthy market. The combination of a DJIA Down Friday* followed
by a Down Monday** has been a rather consistently ominous warning, but they
have also occurred at significant market inflection points (tops and bottoms).
Clusters like this and the high number (12) registered so far
in 2022 are emblematic of bear markets (2022 Stock
Trader’s Almanac page 78). Newsflash: We are still in a bear market. The
key here for the bulls is to reclaim the level of last Thursdays close which was
right at the 50 DMA at the time before the market can get constructively
bullish. Until then my lean is lower, and the June lows are on notice. It is
September, the worst month of the year, Triple Witching, and end Q3 is around
the corner, etc. It’s all here on my feed. Stay cautious.
*Friday or the last trading day of the week. **Monday or
the first trading day of the next week.