Market Update

Uncategorized Apr 24, 2022

Friday was not a good day for the markets. With a half point increase in interest rates announced by the Fed the markets tanked. The NYSE (S&P 500) ended the day down 2.8% while the Nasdaq was off 2.6%. Both of these are huge one day drops.

Declining stocks out numbered the advancers by a 7 - 1 ratio on the S&P while the Nasdaq decliners held that ratio to 3 - 1.

All this negative action tipped the scales and turned our market classification to Red - Market in Correction.

We were previously concerned over the high level of institutional selling days which stood at 6 days for each index. As you will remember, we exit a market when this count reaches 7 days. When we fall into a Red market the institutional selling day counts are erased. We will start to count again when markets return to Green.

We now face a new challenge - market reentry. To reenter from a Red market we will need to see two things:

  •  a convincing rally of 4 to 5 days where market indexes do not fall below (undercut) the low established at the beginning of the rally.
  • a final "follow through day" where indexes advance by at least 1.25% on volume higher than the previous day.

And so we wait. Stay tuned.

Please contact me with any questions.

Duncan Campbell


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