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Proprietary Bull Signal Spotted by Top Street Strategist

The sell-off in stocks has now entered its 5th week with the market paring gains after Ben Bernanke spooked investors with some bearish comments.

Essentially, Bernanke acknowledged a slowdown in the economy, but failed to suggest that the central bank is considering any further stimulus to support growth.

"It's not like the market was expecting a positive comment from him, but not quite this negative, either,” says Stephen Massocca, managing director at Wedbush Morgan in a Reuters interview.

As Bernanke spoke, the stock market reversed course – erasing gains made early in the session and by the close had turned negative.

Sounds pretty bearish – and that may be just the opportunity you’ve been waiting for – at least according to one market pro.

#1 ranked chart analyst and CNBC contributor Jeff deGraaf tells Fast Money in a live interview “I’d be a buyer of weakness.”

According to a proprietary measure he uses at his firm Renaissance Macro Research, the bull market is very much in tact.

deGraaf says the ‘tell’ is the number of stocks in the S&P 500 that are making 20-day lows. “When that number spikes over 50% you’re usually very close to an interim low.”

And deGraaf says 50% of the S&P made 20-day lows earlier in the week. “That to me is pretty good news,” he says.

That’s not to say the selling is over and done. deGraaf concedes the S&P could still pullback as much as 2%. But he feels confident that the market is slowing down not melting down.

”Within the context of the trend, signs are bullish. And I want to be a buyer of weakness,” he concludes.



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Trader disclosure: On June 7, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karabell owns (AAPL); Karabell owns (CSCO); Karabell owns (DD); Karabell owns (GE); Karabell owns (GOOG); Karabell owns (GS); Karabell and River Twice Capital own (IBM); Terranova owns (XOM); Terranova owns (KSS); Terranova owns (CVI); Terranova owns (OXY); Terranova owns (TM); Terranova owns (BJ); Terranova owns (DIS); Terranova owns (PFE); Terranova owns (V); Terranova owns (HPQ); Terranova owns (FLX); Terranova owns (JPM); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (VRTS); Terranova is short (DELL); Terranova is Chief Market Strategist of Virtus Investment Partners, LTD; Adami owns (AGU); Adami owns (C); Adami owns (INTC); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU)

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For Mike Khouw
Cantor Fitzgerald is a market maker in (AAPL), (AMZN), (C), (CSCO), (CVS), (JDSU), (QQQ), (QCOM), (GOOG), (F), (GE), (SMH), (T), (YHOO), (XLF), (SLV), (EBAY), (EMC)

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For Jeff DeGraaf
**No Disclosures

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