EXCLUSIVE: The Market Signal That Makes DriveWealth's Jay Woods 'Cautious'

Listeners of Tuesday’s "PreMarket Prep" show were treated to a very informative interview covering both technical and functional aspects of the market with Jay Woods.

He's the chief market strategist at DriveWealth as well as a New York Stock Exchange executive floor governor. Here's a breakdown of the topics we discussed.

Where will markets be by the end of the year?

"I don't think we're going to make new lows. We might test them." @JayWoods3 pic.twitter.com/VHDGuWv7w5

— Benzinga (@Benzinga) August 30, 2022

Bear Market Rally: Woods was asked to comment on perhaps the most used buzzwords used to describe the recent rebound that was followed by a collapse in the equities markets.

Also, what would it take to get the broad market out of its bearish mode?

Seasonal Factors In Play: Woods noted how seasonality may be working against the broad markets in September, as it has typically been a down month.

October is remembered as a disastrous month because of 1929 and 1987, but it has been volatile over the years in both directions.

In the short term, Woods said he would be surprised if the markets calmed down to end the week with an extended three-day weekend (many make it four) ahead for the Labor Day holiday.

Key Levels: In addition to covering the fundamental aspects of the markets, Woods revealed technical levels for four major components of the S&P 500.

In his opinion, there are key support levels in Apple Inc. AAPL, Microsoft Corp. MSFT, Meta Platforms Inc. META, and Nvidia Corp NVDA that may instigate a rebound or indicate another leg lower.

Worries About Market Leadership: Of all the negatives in the current market environment, the one most concerning to Woods is the performance of S&P Sel Utilities Spdr Fund XLU. The long-term chart of this index reveals a very defensive stance by the institutional players in the markets that are looking to protect assets with some dividend protection against declines in the principal. 

“There is strength across the board in this sector — this is what you buy when you are playing defense,” he said. “[It's] something that is steady and something everyone uses, even in a rocky environment.”

When this sector leads, "it makes me cautious," he told Benzinga.

The interview with Jay Woods in its entirety can be found here:

Photo via Shutterstock.