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9/26/22 Are There Any Bulls Left?

News:

On Friday, the market sell-off continued.

The Dow Jones and S&P 500 tested their respective June lows. Each index managed to close well off its intra-day lows.

A lone bulls stands in the dirt
Photo by Giovanni Calia on Unsplash

Still, it wasn’t pretty…

  • Dow Jones -1.6%
  • Nasdaq -1.8%
  • S&P 500 -1.7%
  • Russell 2000 -2.5%

Sector Round-Up

All 11 sectors closed the day red.

  • Healthcare (XLV), -0.5% was the smallest loser

At the bottom…

  • Energy (XLE) -6.9% got crushed.

Crude oil is nearing its lowest levels of the year as the market braces for a global recession.

At writing, crude is trading near $78/barrel, down more than 40% from its peak in March.

Technicals:

The VIX finally broke out…

VIX chart showing falling long-term resistance
VIX Daily Candles – Chart via thinkorswim

The falling resistance suggests the bottom may already be in. 

But a final push lower for stock prices, especially intra-day, wouldn’t surprise us.

Our other indicators say a turn is near.

Remember this … Market mechanics work like a rubber band. You can only stretch them so far.

Timing:

At this point, the market is stretched out to the downside, about as low as it can go. 

And while the short-term pain isn’t fun for investors, this market is providing an incredible buying opportunity.

The question we are asking ourselves this morning is this: “who is still waiting to sell?”

  • The shock and awe of the Fed & inflation are behind us
  • The market is forward-looking…
  • Without new sellers, the market is poised to move higher.

As we wrap up Q3 this week, we are exiting the known weak spot in the 4-year political cycle.

We’ll bring you the latest on the incoming “sweet spot” later this week.

Watchlist:

^Open Position

FENC support at $7.50
DCPH support at $18
RVNC support at $25
^SGML support at $25
SAVA support at $40
FREY on watch
CANO support at $8

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