Here’s a 10-step plan the stock market must complete to get back on track

The S&P 500 needs to follow a 10-step plan to get back on track, according to one technical analyst.

The stock index so far has completed just the first three steps, reckons the analyst, Instinet’s Frank Cappelleri, as he reflects on its recovery since last week’s selloff.

“We like to cite this list near prospective bottoms,” Instinet executive director wrote in a note late Monday, sharing the rundown shown below.

“And since we haven’t seen one in quite some time, here’s a refresher. The steps in bold have been achieved.”

Instinet/Frank Cappelleri

A plan for the S&P 500.

Cappelleri said the list — featured in MarketWatch’s Need to Know column — “has proven useful, especially during those ultimately ‘fake’ face-ripping rallies that appeared in late August ’15 and late January ’16.”

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Step 9 is “Make higher highs,” and Cappelleri’s chart below shows how the S&P

SPX, +1.39%

is still delivering lower highs — a classic sign of a downtrend.

Instinet/Frank Cappelleri

No higher highs yet.

Now read: Here’s the nagging question at the heart of the stock-market selloff

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