Stock Market Timing & Analysis for Week 18 (Week of 05/02/2022)

Confirmation of a -1.4% move in 1st quarter GDP caused equity selling late in the week. What now?

As was suspected for the last few months, a 1.4% shrinkage of the US GDP announcement caused serious equity selling on Friday.

In addition to a reduction in GDP, many earnings announcements – even good ones – were mostly tainted negatively by horrible earnings guidance.

These economic conditions in addition to the Fed being 180% out of phase with inflation vs growth seem to indicate more pain to come – unless you are short the market in general!

The broad market had been perched on a critical support level that extended back to the early part of the year but has broken that support with almost double the 50-period average volume on both the weekly and daily charts.

That is a serious move down and creates a new 52-week low for the broad market.

New lows frequently lead to new lows in the same fashion that new highs frequently lead to new highs.

Even more concerning is that the next clear support level is approximately 7 to 8% lower.

Certainly, the market is technically oversold so a bounce in a bear market might be expected.

However, serious technical damage has been done and will need to be repaired before a reliable bullish trend can emerge.

Keep an eye on these critical levels to be able to detect when a stronger market has a chance of developing.

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Market timing for week 18 – 5/2/2022

Comments are always welcome.

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