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Today is September 30, 2022 |
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Good afternoon. Readers of "a certain age" might remember a hit song from 1969. "Dizzy," by Tommy Roe, could've been written to describe the recent market. Last Friday (9/23) the Dow Jones lost 600 points… Only to bounce up 200 points three days later. |
| Bill Spencer Editor-In-Chief
True Market Insiders |
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No matter… As Chris Rowe has been saying for months now, "The market is going 'by the book.'" Meaning, this is a midterm election year, and the market almost always sells off leading into the election. This year the election takes place on Tuesday, November 8. So expect more downside between now and then. Earlier this week, our #1 indicator, the "granddaddy of all indicators," sent up a red flare. The New York Stock Exchange Bullish Percent Index (NYSE BPI) moved into 'oversold' territory. In the point-and-figure view of the BPI, below, oversold territory is the light gray region of the chart below 30%. The black arrow at the left points to the '30' level. |
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The red arrows show where the market bottomed in 2016, late-2018 and in March 2020. The oversold region is critically important, because it means that so much selling (by bears) has occurred that buyers (bulls) are beaten down and exhausted. In his "Technical Tuesday" column this past Tuesday (naturally), Chris walks you through this feature of a market bottom – the "running (away) of the bulls." And he explains something else. And here we come to the good news that you're not hearing about in the mainstream financial media. He explains how and why, when the market finally reverses back up out of oversold, stock prices are extremely likely to march higher – literally unimpeded. I know that sounds like an exaggeration, but it isn't. How low can the market go? A better question is: "How HIGH can it go? And how SOON?" That said, the market has gotten beaten up. Just look at the internals, a.k.a, "sector breadth." This is the US Industry Bell Curve, one of the indispensable tools available on our Sector Prophets Pro sector research and data platform. The red boxes are bearish sectors, where Supply is in control. The blue boxes – or, in this case, "box" – are bullish sectors. |
Notice how most of the sectors are pushed way out to the left of the Curve. Those sectors (the ones to the left of the dotted black line) are oversold. To add some context to that gory image, here's the Bell Curve from March 9, 2020, during the depths of the COVID calamity. |
Look familiar? Again, the market is behaving as expected in a midterm year. Historically, the next nine months promise to be the strongest three quarters out of all 16 quarters of the four-year election cycle. All of us here at True Market Insiders are going on battle stations until the market bottoms and reverses. A market bottom happens, on average, every three years. For the sure-footed trader, the opportunity here is tremendous. We're going to eat, drink, sleep and brush our teeth "market bottom." Be sure to read True Market Insider each week for actionable insights and trade ideas tailored to the current market. Thanks for reading, and enjoy your weekend! Bill Spencer
Editor-in-Chief, True Market Insiders |
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©2022 by True Market Insiders, LLC, Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of: True Market Insiders, 7901 4th St. N STE 6113 St. Petersburg, FL 33702.
The information contained herein has been prepared without regard to any particular investor's investment objectives, financial situation, and needs. Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions. True Market Insiders LLC is not an investment advisor and is not licensed to give specific financial advice. The chairman of True Market Insiders, Chris Rowe, is also the CEO, CIO and owner of Rowe Wealth Management LLC, which is not owned by and is not the owner of True Market Insiders.
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