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"Research Briefing RECAP: Stockton Says We’re in Cyclical Bear Cycle Within Secular Bull Market"

posted by CAPIS on 05/20/2022 at 11:10 am

by CAPIS

05/20/2022 at 11:10 am

On Thursday, May 19th we held our May research briefing, featuring Fairlead Strategies co-Founder Katie Stockton. Fairlead Strategies, LLC is a Connecticut-based independent advisory service providing unbiased technical analysis, helping investors manage risk and discover opportunities.

Click here for the video presentation

Katie Stockton’s presentation addressed the following topics:

 

Market Has Weak Long-Term Momentum (2:50)

  • Market will not reward great stock picking. (3:39)
  • Notable loss of long-term momentum has the market flashing a “sell” signal that could last for approximately 9 months. We are currently in month 4 of this “sell” signal range. (4:35)
  • SPX’s current support is at 3815, but if the market drifts lower, the next support level will be at 3500. (6:32)
  • Growth and Tech stocks are providing downside leadership while large-cap stocks have more downside. Example: AAPL is now exhibiting downside leadership which is a negative development for the tech sector. (7:17)

Internal Market Indicators Point to “Oversold” (9:01)

  • Market breadth has been deteriorating for several months now. (10:20)
  • The current market contraction has yet to bring a “long-term” oversold reading.  (11:00)

 Higher Volatility – No Kidding (11:26)

  • Just one look at the VIX, reveals the new high volatility environment. (11:35)
  • The VIX is establishing higher “Lows,” resistance has now moved to the mid-30 range. (11:50)
  • The next resistance for the VIX is around 40. (12:04)
  • Investors need to remember historically that high volatility cycles last a shorter time than low volatility cycles. (12:44)
  • The CNN “Fear and Greed Index” indicates market sentiment, which includes the VIX, is oversold and can stay that way given current sentiment. (13:05)

U.S. Equities Remain the Place to Be (14:00)

  • International markets remain in a “long-term” downtrend versus the U.S. – both in Developed Global and EMEA. (14:28)
  • Dollar remains stalled – showing signs of exhaustion according to both its DMARK and stochastic indicators. (15:20)
  • Bitcoin is exhibiting negative momentum below its support levels and there is additional room for the downside. The next support level is 27,200 which could trigger a relief rally. Resistance lies at the 40,000 level. Bitcoin is being treated and acts like a “risk asset.” (17:05)
  • Gold’s uptrend has slowed with support now at the 1800 level. (18:45)
  • WTI crude oil is “re-testing” its long-term resistance levels with the potential for more upside momentum. It will retest the $110 to $115 per barrel level. Support can be found at $100 per barrel. (19:40)
  • 10-year Treasury yields have advanced from a downtrend – resistance is at the 3.25% level and then again at 4.00%. 30-year bond yields are likely to stabilize in the near term. (21:24)

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