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June 19th 2022 |

Key Takeaways

  • Most positive divergence have been wiped out.
  • Stay on the sideline as the risk-/reward ratio is too low to act contrarian.
  • Market is quite oversold and, therefore, the chances for an oversold bounce are accumulating.

Market Review |

U.S. stocks finished another week with sharp losses. The Dow Jones Industrial Average finished at 29,888.78 and dropped 4.8% for the week. The blue-chip index suffered its 11th negative week in 12. The S&P 500 closed the week at 3,674.84 and lost 5.8% week to date. The Nasdaq fell 4.8% from last Friday’s close to end at 10,798.35. All key S&P sectors ended once again in deep negative territory for the week, led by energy. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 31.1.

Short-Term Technical Condition

The S&P 500 closed slightly below 3,800 on Monday and, therefore, our suggested stop-loss limit was triggered on that day. Moreover, the S&P 500 continued to deteriorate significantly during the week, wiping out all positive divergence we had seen before. Currently, our entire short-term-oriented trend indicators remain bearish (and even gained more negative ground last week). On Friday, the S&P 500 closed 254 (!) points below the bearish threshold of the Trend Trader Index, plus both envelope lines started to gap down significantly. Additionally, this strong price driven downtrend is also confirmed by READ MORE

 


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