3rd Down Friday/Down Monday In A Row – 12 in 2022
Technically the market is 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 and then 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.