By: Jeff Cooper

Hit and Run Morning Stock Report: October 20th, 2022


Despite last week's Key Reversal Day, impressive breadth, and advancing volume, markets fell Wednesday on very weak breadth and a falling NYMO.

The key 3880 Slim Jim of flat line consolidation snapped with the SPX dropping to 3666.

However, it rebounded into the runoff closing at 3695.

In sum, it rebounded off its 20-day ma.

But it is not a Holy Grail buy setup as the 20-day is declining, not rising.

A characteristic of Bear Markets is extreme volatility underpinned by the uncertainty surrounding the Bear.

This produces powerful reversals in both directions.

As I said recently, the Bear likes no one, neither shorts nor longs.

It is as though the Bear is determined to make sure everyone loses-- bulls and bears alike.

This makes it very tough to know which reversal is the real deal and which is just another bull trap.

The NYSE and NAZ McClellan Summation Indices are close to turning down.

If that occurs today, it should point the way lower and we should look to increase our short positions.

After Wednesday’s bell, IBM reported which took the futes higher, but the rally was short-lived as TSLA also reported taking the futes down.

Overnight I saw them trade-off over 20 points but here two hours prior to the opening bell they are up 11 points.

TSLA should affect speculative sentiment, but the market is not getting downside traction below this key 3880 region.

The SPX remains in a “standoff” between this 3680 support and the 3730 square.