The long awaited Federal Open Market Committee meeting is Wednesday. Folks will inspect every syllable that comes out of Fed Chair Jerome Powell's mouth during his press conference. The bulls will look for that, oh, so elusive pivot, and the bears will look for talk of even more hikes.
Some folks think whatever Chair Powell says will be priced in, because, come on, the market is down so much since Jackson Hole. Then there is an entire camp who believes that earnings estimates need to come down a whole lot more, because lower earnings are not yet priced in.
This is why I am not particularly good at writing narratives on the market. That's why I like to stick to the indicators. So, let's look at where they are.
The 30-day moving average of the advance/decline line continues to work its way toward an oversold condition. By my estimation it will get there around midweek next week.
The Overbought/Oversold Oscillator, you may have noticed, hasn't pulled back at all this week. The next four trading days it has a good chance of doing just that. Keep in mind this is based on breadth and only four of the last 10 trading days have seen breadth negative.
The McClellan Summation Index is still heading down. It now needs a net differential of positive 3,400 advancers minus decliners on the New York Stock Exchange to halt the decline.
The number of stocks making new lows has expanded this week, although they have not expanded with a lot of oomph. Since we've done so much hovering in the last few days there is a chance they will do so in the ensuing days. However the Hi-Lo indicator now sits at .11 for both the NYSE and Nasdaq, so it is oversold. Yes, it can get more oversold, but I've never seen it go below zero.
The Volume Indicator is making its way lower, although I don't expect it to get oversold until sometime next week.
The major indexes have milled around in the same trading range since last Friday, so no levels have been broken, no lines crossed. Yet, sentiment has gotten more bearish as the days have gone on.
The Daily Sentiment Index (DSI) for bonds is now 10. The S&P joins it at 10. Nasdaq's is at 13 -- I suppose you can thank Apple (AAPL) for that. If not for Apple, it might also be at 10. So we have to ask ourselves if Chair Powell gives the market something even more to fret over, won't these DSI's finally get to single digits?
I think they will.
In a bull market, the market often jumps the gun on rallies. In a bear market -- and we remain in a bear market -- we often wait, and sometimes overshoot. I still contend I don't know how we get to that intermediate-term oversold condition, but with each passing day we get closer.