Gameplan For The Week Ahead

by Geoff Garbacz | 07/04/2022 8:26 AM

Below are comments taken from the Erlanger Week Ahead on the current gameplan for stocks.

Correction Price Pattern Status for S&P 500: Last week’s action saw all indexes move lower and down 11 of the last 13 week. We remain with a focus on selective buys and but would no longer use selective shorts of Type 2s (Strong Technically with Low Short Selling) moving to Type 4s (Weak Technically with Low Short Selling) as well as Type 4s that do not an Erlanger Options Rank higher than 70 (Excessive Put Action) as we are now in rally mode. The Sector Erlanger Options Rank sees 7 of the 24 Sectors with a score about 70 down from 19 last week. Put Squeezes are still in play now but not in as major a way.

The NASDAQ Composite, NASDAQ 100, Russell 2000 and S&P 400 Mid Cap all lost more than -20%, putting them into a bear market. The S&P 500 joined bear market two weeks ago but is now out of bear territory thanks to Friday's action. The Dow Jones Industrial Average never got into bear territory.

Type 4s fell three weeks in a row two weeks ago and there was a 53% chance of a bounce two weeks agowhich we got. We track this pattern for another two weeks as see how much aftershock we get. There was none this past week.