Technical Market Outlook and October Playbook

It doesn’t take a CMT charter to know that stock prices are in downtrends. Until that changes, we’re better off being underweight US stocks. In fact, we’re better off being underweight just about everything. Bonds are in downtrends. So are most commodities. And cryptos might be the worst of all. Cash has been the only real safe haven – and even that has been gutted by inflation.

US Equities

The S&P 500 is below 4100 and working on undercutting its June lows.

It’s entirely possible that this is a successful retest of the bottom, but we aren’t really seeing the evidence of that. In fact, breadth measures are saying the opposite. More stocks were setting new 52-week lows last week than they were at the June lows. And more stocks were getting oversold. The Advance-Decline line for both the S&P 500 and the broader NYSE Composite broke to new lows, too. There simply isn’t much evidence to support stocks rallying to new highs from here. If the SPX is back above 4100, then I think the conversation changes. But until then the bias is lower.

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