US stock markets closed last Friday with a substantial and widespread gain. Do we see a dead cat bounce or the beginning of a recovery? So far, there are more reasons to suspect the former.

The CNN Fear Greed Index was down to 7 last week, rebounding to 12 by Monday. Current levels are still in extreme fear territory, but a rebound from multimonth lows often heralds a return of buyers who think the emotional selloff has gone too far.

Technically, the SP500 has managed to bounce back from a bear market territory and has temporarily returned to levels above 4000, while Dow is above 32000.

However, in our view, we saw positional profittaking on Friday, but not the end of a downward trend. The weekly charts SP500 and Dow Jones indices have not yet reached the oversold area where they appeared attractive for buying in March 2020.

Particularly worrying is the comparatively quiet nature of the selloff. The market volatility index VIX remains the only one of the seven Fear and Greed components in neutral territory.

The latter signals a systematic selloff of assets rather than a panic flight. This is not a straightforward approach for the market to change.

Treasury and Fed officials are often willing to flood the markets with liquidity in cases of extreme volatility. Still, without it, they see what is happening as a natural process in which it is harmful to interfere.

The technical picture in the US indices now more closely resembles the first half of 2008. That means…