By: Jeff Cooper

Hit and Run Morning Stock Report: November 22nd, 2022

Bull Flag or Rollover?

Every major average fell Monday. The DJIA was-45, SPX -15, NAZ -121, Russell 2000 -13.

Breath was more negative than the above figures would suggest as the NYSE produced 222 net declines and the NAZ generated 1143 net declines.

Monday as the NAZ McClellan Index (NAMO) fell to -3.02, the NAZ Summation Index turned down for the first time since the October 13, 2022 Key Reversal Day.

Is it going to find support on a Pinoccho of the Zero Line…just as it found resistance on a Pinocchio of the Zero Line twice before recently in mid-September and in early October?

The recent uptrend on October 13 was announced not just by the large range Key Reversal Day, but by a positive divergence in the NAMO and Price.

As shown in the above chart, while the NAZ made a new low for move in mid-October, the NAMO was far higher.

The big 3 for me in determining trend are:

My Swing Method-- the 3 Day Chart and particularly the 3-Week Chart

The slope of moving averages: the 20 DMA and the 50 DMA

Breadth -- as expressed by the NAMO and NYMO (NYSE McClellan Index)

On Monday the NYSE McClellan Index (NYMO) fell to +17.08.

So the NYSE (Summation Index) is still 17.08 points above the point where it would turn lower and trigger a more definitive sell signal for markets overall.

In sum, markets continue in a narrow range and tech, in particular, gets hit by an ugly stick nearly every day of late.

Be that as it may, the NAZ is pulling back to backtest Ghost Line support coincident with a Bowtie of its 20/50 day moving averages. It may be working on a Bull Flag.

As well the SPX shows what may be a higher level Bull Flag being carved out just below its 200-day moving averages.

Could we get a catalyst that sparks a Santa Claus rally? Will Pivot Perception perpetuate by a few choices and well-timed Fed-Speak unleash a rally…to help retailers and retail alike?

With the tape strewn with oversold names testing October lows, it would not be hard to orchestrate such a rally.

The other side of that coin is if there if upside traction does not show up in the stocks being sold indiscriminately, then money managers may decide there is no alternative but to jettison them from their holdings to “look better” at the end of year.

The T Rex in the ointment is TIME.

As offered, November is 49 months from the start of the October 2018 waterfall into Christmas 2018.

That suggests the potential for a swoon is on the table.

However, the analog with the 2008 crash is running out of time.