{"id":20126,"date":"2022-09-23T07:30:25","date_gmt":"2022-09-23T11:30:25","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20126"},"modified":"2022-09-23T07:30:25","modified_gmt":"2022-09-23T11:30:25","slug":"market-bearishness-is-reaching-a-tipping-point","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/market-bearishness-is-reaching-a-tipping-point\/","title":{"rendered":"Market Bearishness Is Reaching a Tipping Point"},"content":{"rendered":"

This has been a tough month for the stock market.<\/p>\n

As of Wednesday’s closing price, the S&P 500 was down more than 4% for September. The Russell 2000 has been hit with a 4.5% decline. And the Nasdaq Composite Index has fallen 5%.<\/p>\n

Unsurprisingly, lots of investors are nervous heading into the end of the month. And the aggressive folks are talking about making big bets on the short side.<\/p>\n

But the market is setting up for a bounce…<\/p>\n

Now, I can’t tell you if the bounce is going to be a multi-week move that rallies all the indexes several hundred points and gets everyone talking about a “new bull market.” <\/p>\n

It might just be one of those “one-day wonder” rallies that crushes the folks who got a little too aggressive with short sales.<\/p>\n

But we’re definitely setting up for a bounce.<\/p>\n

Take a look at the McClellan Oscillators for the NYSE and the Nasdaq (NYMO and NAMO)…<\/p>\n

\"Chart\"<\/div>\n
\"Chart\"<\/div>\n

These are momentum-based indicators that help determine overbought and oversold conditions. <\/p>\n

Readings of more than 60 indicate severely overbought conditions and often precede large declines in the markets. Readings of less than -60 express extremely oversold conditions and usually lead to strong bounces in stock prices.<\/p>\n\n\n\n
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Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Both indicators closed in extremely oversold territory on Wednesday.<\/p>\n

This is the fifth time in the past year that both the NYMO and the NAMO have been below -60 at the same time.<\/p>\n

Now, here’s how the S&P 500 performed after the four previous times…<\/p>\n

\"Chart\"<\/div>\n

The oversold conditions didn’t always mark the exact bottom of the decline. <\/p>\n

But in all three cases, the S&P 500 was sharply higher within just a few days of the oscillators dropping into extremely oversold territory.<\/p>\n

My analysis indicates that we’ll see something similar happen this time as well…<\/p>\n

Traders should take advantage of the situation and buy stocks into any weakness over the next day or two, in anticipation of a solid bounce in the days ahead.<\/p>\n

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

<\/p>\n

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

In today’s mailbag, subscribers thank Jeff for sharing his options trading strategy<\/a>…<\/p>\n

\n

Jeff, thank you so much! I enrolled in your 3-Stock Retirement Blueprint <\/em>program a few weeks ago, and today I put it to work. I trade options daily and usually use SPX – but its potential profit was quite low today. So, I augmented my order with 100 put spread contracts on the highest return stocks of your three suggestions.<\/p>\n

At market close – both the ETFs I had sold put spreads on – were up a total of $789 after costs. I’ll use this strategy on my day trades in the future. Thanks!<\/p>\n

– Larry A. <\/strong><\/p>\n<\/blockquote>\n

\n

Hi Jeff,<\/p>\n

I’m spending the day today learning calls and puts. I hope to become a successful options trader. I chose to join with you. I believe you do care about helping the average person grow a successful portfolio over time.<\/p>\n

You emphasize “lower risk” by teaching us the right way with options – not a fast payday every day. I’m with you, and I aim to succeed. I like your teaching style so far. I was a teacher for over 40 years. I’m anxious to keep going! Thanks for putting yourself out there for us.<\/p>\n

– Cynthia T.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Traders should take advantage of this situation\u2026<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","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-20126","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\/20126","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\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20126"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20126\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20126"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20126"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20126"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20126"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}