The stock market remains in a correction. The S&P 500 Index posted a big U&R move on Monday through the October lows, but that has so far played out as a reaction rally into the 200-day moving average, where resistance persists. After Monday's U&R, the index engaged in a great deal of intraday volatility to end the week on a strong note as it pushed into moving average resistance on lighter volume. Despite the 2.43% move in the S&P, volume was insufficient for a follow-through day.
The NASDAQ Composite Index is where the brunt of the selling has occurred as high-PE names go through interest-rate induced PE-contractions, and remains far below its own 200-day moving average. Most individual stock chart patterns are decimated, and will likely require some time to heal, at best, notwithstanding some reaction rallies off current lows. We see no reason to be involved in this market on the long side unless one is intent on trading potential oversold bounces. Meanwhile, extreme intraday volatility makes the short side of the market a dicey proposition at this stage of the decline as most everything is extended on the downside. It may be that near-term the indexes will consolidate the 2022 breakdown off the peak for a period of time before resolving lower, and this process could involve some upside from here, but we will allow market events play out for now and await any changes.
The Market Direction Model (MDM) remains on a CASH signal.