{"id":11773,"date":"2018-10-25T07:30:21","date_gmt":"2018-10-25T11:30:21","guid":{"rendered":""},"modified":"2018-10-25T07:30:21","modified_gmt":"2018-10-25T11:30:21","slug":"another-reason-to-look-for-a-bounce","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/another-reason-to-look-for-a-bounce\/","title":{"rendered":"Another Reason to Look for a Bounce"},"content":{"rendered":"

Ouch.<\/p>\n

Selling pressure continued to hit the stock market yesterday – taking out technical support levels one by one. The S&P 500 could not hold up at the 2725 closing low<\/a> from two weeks ago. The index made a feeble attempt to bounce when it tested Tuesday’s intraday low at 2691. The S&P popped about 20 points higher from there.<\/p>\n

But, the pop was short-lived. Sellers stepped up again and hit the market with wave after wave of sell orders.<\/p>\n

By the time the closing bell rang yesterday, the S&P was down 85 points. The index is in negative territory for the year. And just about nobody I know is looking forward to the opening bell today.<\/p>\n

That’s probably a good sign.<\/p>\n

Investor sentiment – a contrary indicator – is now about as bearish as it has been at any point this year. Many technical indicators are in “extremely oversold” territory.<\/p>\n

Some of our favorite indicators – like the CBOE Put\/Call ratio<\/a>, the McClellan Oscillators<\/a> for the NASDAQ and NYSE, and the price levels of VIX<\/a> options – are all at levels that occur at or near at least a short-term low in the stock market.<\/p>\n

But, as I reviewed various indicators last night, it was the following chart that caught my eye…<\/p>\n

\"\"<\/p>\n

This chart shows the percentage of S&P 500 stocks that are trading above their 200-day moving average<\/a> lines. Last month, this chart was at 75. Today, it’s at 34.<\/p>\n

Think about that for a moment. Even during the two-month correction earlier this year, most stocks were still holding above their 200-day MA. Today, after a two week decline, far more stocks are in oversold territory.<\/p>\n

Even though the S&P 500 is “just” about 10% below its all-time high, this chart tells us the average stock has sold off far more than the indexes.<\/p>\n

This is just one more indicator to throw on top of the pile of oversold indicators. The proverbial rubber band is now quite stretched to the downside.<\/p>\n

I can’t tell you exactly when a bounce will develop. But, there is a bounce headed our way.<\/p>\n

And by the deeply oversold status of many of the technical indicators, I suspect it could be a violent move to the upside.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

When do you think a bounce in the market will happen? Do you agree with the bearish investor sentiment?<\/p>\n

If you have any other trading questions, suggestions, or stories send them to feedback@jeffclarktrader.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Believe it or not, that\u2019s probably a good sign.<\/p>\n","protected":false},"author":34,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-11773","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/11773","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/34"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=11773"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/11773\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=11773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=11773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=11773"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=11773"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=11773"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=11773"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=11773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}