By: John Del Vecchio and Brad Lamensdorf
The market is deeply oversold.
Sentiment is extremely bearish.
Recent price action in certain stocks suggests that selling is starting to get exhausted. The chart below shows the number of buying and selling climaxes using Point & Figure Charting.
The sell climaxes represent stocks that made a new low only to finish the week higher. They are in blue on the chart. The number of sell climaxes are now the highest since the COVID lows in 2020. That signal coincided with a huge run in stocks over the next year.
Obviously, with war breaking out in Europe, the market is digesting new information by the minute. Volatility is likely to remain high.
However, this signal does have significance. The number of sell climaxes may not predict the exact low, but it’s a reliable indicator to suggest that selling is exhausted.
At least for the intermediate term.
Originally Posted March 4, 2022 – Market Ready to Bounce?
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