Title: Weekly ChartStorm — The 2022 Bottom Show: Chart Storm (chartstorm.info) Author: Callum Thomas (Founder & Editor, The Weekly ChartStorm; Head of Research, Topdown Charts) Date: 2026-06-06 URL: https://www.chartstorm.info/p/weekly-chartstorm-the-2022-bottom Note: Free Special Edition Chart Storm post, saved verbatim. Written prose article — no (mm:ss) timestamps. A retrospective post-mortem surveying the charts/signals that helped flag the 2022 market trough. Body reproduced as published.
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NOTE: traveling this week (family holiday), so this one is prepared in advance — a follow-on from a previous post on the 2021/22 top (the charts that helped flag the peak). The purpose here is to look at the charts and clues that helped flag the 2022 market trough — for process development, education, and preparation for the next downturn.
Methodology: charts are shown as they appeared at the time (NOT updated), in chronological order — because at the time it was a process of "here's some clues a bottom might be near", then "it looks like the bottom is in (but not 100%, risks remain)", then increasing technical and macro-fundamental confirmation until it became "obvious".
1. IPO Activity Collapsed
Equity capital markets activity — IPO and SPAC issuance — crashed below March 2020 levels by mid-2022. IPO activity is a reliable indicator of the stage of the market cycle (a symptom of where valuations, sentiment and liquidity are), and there's a supply/demand aspect to it: surging IPOs mean more stock supply hitting the market; collapsing IPOs mean supply slows. This helped flag both the 2021/22 peak and the 2022 trough.
"After peaking in early 2021, the previously booming IPO (and SPAC) market has turned to bust… when this indicator plunges towards 0%, that has historically been a sign that a bottom is close." (ChartStorm, 10 Sep 2022, Topdown Charts.)
2. Valuations Reset
Valuation indicators gauge investor confidence; the level matters but so does the change. Forward PE ratios saw a major reset, adding evidence of a possible trough.
"US equities are in line with recent history average (but not cheap/below average). Whereas the rest of the world does look cheap vs its own history (and vs USA)." (10 Sep 2022, @QCompounding.)
3. Speculators Crowded to the Short Side
Speculative futures positioning plunged into net-short territory. This is contrarian: speculators are all-in near the peak and crowded short near the bottom; crowded shorts also represent future buying, because a rebound forces panic short-covering.
"Speculative futures positioning is heavily net-short." (25 Sep 2022, @Barchart.)
4. Margin Debt Dropped
Big shifts in margin-debt balances matter: large increases signal greed; large drops signal panic and ultimately a selling climax as margin calls trigger capitulation. Once all the sellers have sold, selling pressure exhausts and the bottoming process can run its course.
"BofA analysis suggests the shift in margin debt rate of change is a contrarian bullish signal…" (9 Oct 2022, @ISABELNET_SA.)
5. Seasonality Worked
Not because historical averages foretold a rally, but as a prompt to think about the unthinkable — a Q4 rally — when everyone was fixated on the bear case.
"Sentiment is extremely bearish, so by definition there are a lot of minds that could be changed and in so doing drive upside." (16 Oct 2022, Topdown Charts.)
6. Fund Manager Cash Allocations Surged
This tells you two things: the crowd is bearish (often a contrarian signal) and managers have dry powder (future buying power).
"Fund manager (surveyed) cash levels are apparently at the highest levels since 2001." (23 Oct 2022, @RyanDetrick.)
7. A Bullish Divergence Occurred
A bullish divergence is a lower low on the index against a higher low on the indicator (the 14-day RSI) — a prompt to consider that a new bull market may be starting.
"An intriguing 'what-if' setup on the weekly chart (bullish RSI divergence)." (23 Oct 2022, @mattcerminaro.)
8. We went Full Circle on 60/40 Expected Returns
Forward-looking expected returns for the 60/40 portfolio went from deeply negative in 2021 to matching 2020 levels (driven by higher yields and reset valuations), hinting at upside.
"Several rounds of shock therapy have brought the 60/40 portfolio investing approach back from the dead." (23 Oct 2022, Topdown Charts.)
9. Retail Cash Allocations Spiked
Same signal as the fund-manager cash chart: retail raising cash reflects pessimism and panic, but also future buying power and selling exhaustion.
"Reported investor portfolio allocations to cash rose to one of the highest readings of the past decade during October." (6 Nov 2022, Topdown Charts.)
10. Sentiment Crashed and then Turned Up
The classic signal of sentiment plunging and then turning up.
"The 'Euphoriameter' ticked up slightly in October off of the lowest point since 08/09. Contrarian bull signal?" (13 Nov 2022, @topdowncharts.)
11. Back Above the 200-day Moving Average
This one triggers later but with less noise. The added condition of spending a material (6-month) period below the 200-day before crossing back above it reduced false signals and has historically flagged the start of new cyclical bull markets.
"Recapturing the 200-day moving average (after a material 6-month period below) is usually a good thing… 'nothing good happens below the 200dma'." (4 Dec 2022, @RyanDetrick.)
12. Peak Inflation
A big driver of the 2022 drop was the inflation surge, so the peak in inflation was a key development plotting a pathway higher.
"Seems like peak inflation is good for equities — unless it is followed by recession." (4 Dec 2022, @patrick_saner.)
Wrap-up: at the time it was a process of gathering evidence and clues that a trough was possible, then increasingly likely, then confirmed — obvious only in hindsight. The post-mortem shows what worked and how to think and assess in order to get on the right side of the market.
Callum Thomas, Founder & Editor of The Weekly ChartStorm and Head of Research at Topdown Charts.