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Proprietary Bull Signal Spotted by Top Street Strategist

Tuesday, 7 Jun 2011 | 6:32 PM ET

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.

Is the Bull Market Intact?
Jeff deGraaf, Renaissance Macro Research, provides insight on where the market is headed. "We like the price action that we saw yesterday- 50 percent of S&P names hit 20 day low at the same time," he says.

"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 Jeff DeGraaf
**No Disclosures

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