The HCM-BuyLine® is still positive, but it has weakened, and we are monitoring it closely. The markets have sold off to the point that they are now oversold, and we expect them to be sloppy and volatile for a few more weeks. Tuesday’s relief rally looks like the markets are trying to find a bottom. There are a lot of stocks that have been in correction mode, but the indexes have held up reasonably well. Corrections are normal and should be expected, so no real surprise that we are experiencing a correction, especially with all the shenanigans happening in Washington.
Monday’s SPX drop back below Sept ’20 lows to kick off the week should allow for a bit more weakness in the days ahead; yet technically this decline likely is buyable mid-to-late week.  There remain the same litany of issues that have damaged market confidence:
  • COVID-19 delta surge
  • Concerns about “peak everything”
  • Are these supply chain glitches or is this massive inflation?
  • Interest rates are rising, which many see as a negative (we really don’t)
  • Fed is tapering
  • S&P 500 has been acting poorly since July
  • S&P 500 suffered technical damage
  • S&P 500 has risen so much in the last 18 months, it is far above its 200D
  • October tends to be a bad month for stocks
  • Washington turmoil on debt ceiling
  • Fed Chair nomination in peril given trading revelations of Fed governors
  • Earnings season might show cost pressures
And the list goes on… The most recent range for the S&P 500 (SPY) is created from the first ten trading days of July, giving us a high of $437.92 and a low of $427.52. The Nasdaq 100 (QQQ) has a high of 365.49 and a low of 352.68. With that said, both major indices are holding within the range, showing that we are in a neutral zone. 
With a looming debt ceiling on October 18th, we should keep these levels in mind as the market holds its breath on a timely agreement. On the other hand, while the market is worried about a government shutdown, it could easily take a higher note if the debt ceiling is quickly raised.