Are markets Setting up to Rally, or More Selling to Come?

2 years ago
8

(4/19/22) Markets continue to consolidate along recent set of lows; trading below the 50-DMA, providing some overhead resistance. This, combined with the most negative investor sentiment in 30-years, and the market hasn't really done much since September '21. Over the last few weeks, markets have been on a sell-signal, and declining. Over the new few weeks, markets are likely to work off over-bought conditions, triggering a money flow buy-signal, and setting up markets for a counter-trend rally. Consternating for investors? You bet--underlying sentiment is negative, suggesting markets may have more fuel for a rally, turning media bias from negative to positive; but at that point, shrinking liquidity, slowing economic growth, a pick up in layoffs, and a decline in wages--recession will begin to take hold. It's counter-intuitive, but there is so much negative sentiment at this point, it's actually hard to have a bear market. But it's coming...
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