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Heads Up: A Change in Character October 29, 2022

Posted by Tom in Thoughts.
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October 28, 2022 –  Heads Up Folks !  This looks like a “change in character” in this market.  That means either “a low” was put in or “the low” for this market cycle was put in.  In either case it sure looks like at least a “tradeable bottom” so I am starting to phase in some equity positions.  I’ll start with index ETF’s since they will cover a broad area of the market and if I’m wrong (which could be) I can exit back to neutral / cash quickly.

I’d like to see two closes above the resistance level of 11230 (green dashed line) on the NASDAQ Composite Index before I’d feel more comfortable and increase long positions.  That level along with a few more confirming indicators would improve confidence.  But . . . let’s not get ahead of ourselves. 

On Wednesday of next week (11/2) we’ll get the next dose of FED interest rate speak.  This market sure wants to see a more modest increase in interest rates . . . say ½%.  I note that the US Dollar is down and the Treasury Bond rates have recently gone down.  Both events support a rally in US equities.  Earnings and guidance have slowed so perhaps the FED will take a ½ step back from the rapid interest rate increases and give the economy a chance to stabilize.  One can only hope.

The Short Term Sector Strength table –

It’s nice to see something other than defensive and Energy sectors toward the top.  An encouraging sign, let’s hope it continues.  That’s it for now.  I expect a slight pull back early in the week and then a push higher IF the FED shows some encouraging news on Wednesday.  Now is the time to keep your head up and observe.  So far the rallies have just been short term short covering by traders.  The question now is: will investors start to come back into the markets?   Have a good week.    …………  Tom  ……………

Price chart by MetaStock; table by http://www.HighGrowthStock.com. Used with permission.

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