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Was That ‘The’ Bottom ?

PUBLISHED Jul 30, 2022, 6:46:06 PM        SHARE

img
imgTom Hamilton

July 29, 2022 – The question on the mind of many is: “Was that the bottom?” I’ll get right to it with a definitive ‘Maybe’. I’ll list the Pro’s and Con’s so you can decide:

The Bottom Is In –

  • Prices made it up through the 50 day moving average.
  • The Advance / Decline line has improved quite a lot.
  • Small Cap stocks are showing strength & moving higher.
  • Many indexes have bottomed out at their 200 day moving average.
  • Bond interest rates have actually come down over the past weeks.
  • The FED “appears” to be more “dovish” (leaning toward less increases).

The Bottom Is Not In –

  • The recently rally was due to short positions being covered / bought back.
  • Volume on Up bars is modest at best; not a surge of buying (yet).
  • New High vs. New Lows is just OK, not showing strength.
  • Prices are now at a resistance point back to the previous highs in early June.
  • Volume on Friday’s big move was pretty darn anemic.

So now what? I’m expecting a pull back early next week. The amount of that pullback and the volume that it creates should be an indication of the strength of this market. I found it curious that oil / energy and consumer discretionary sectors were doing very well last Friday. Not exactly what you’d expect to see if an economy was going into a recessionary period. Short covering or is somebody getting very optimistic early?

Right now I’d say what we are seeing is a ‘Tradeable Bottom’ within a Bear market, which means that a retest of the lows is likely. I could be wrong, but I’ll wait for a firm*(er)* confirmation on my daily chart.

Let’s keep an eye on the price action next week. If things are truly strong any dip will be bought and we may have an improved price structure to work with for the rest of the year. But right now, I’m not totally convinced. Have a good week. ……… Tom ………

Price chart by MetaStock; pie chart & table by www.HighGrowthStock.com. Used with permission. More Sector information at: www.Special-Risk.net



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