The U.S. stock market looks oversold and ready for a meaningful bounce!

Sentiment indicators clearly point to a rebound. There is currently too much bearish sentiment among often-wrong investor groups.

Put volume set an all-time record on Friday, September 23, which stands out as the best contrary indicator in this market at this time.

Traders and investors are understandably fearful of the dramatic hawkish turn from the Federal Reserve in recent weeks following worse-than-expected August inflation numbers.

However, I don't believe that Fed Chairman Powell and his team are ready to back up their inflation-fighting rhetoric with continued hikes in interest rates when recessionary data builds in earnest and when "deflationary" forces begin to prevail over the next few weeks and months.

The obvious best asset play for when the Fed "blinks" is in the precious metals sector, with silver and silver-related mining stocks probably leading the way higher.

Even though gold and silver look best here, "all boats" will rise when the Fed rhetoric changes from hawkish to neutral which I expect will happen over the very near term. The Nasdaq-100 Index will probably lead the way higher in the general market when the Fed turns as tech stocks rebound sharply.

Nasdaq-100 Stock Index Daily Chart with 200-day Moving Average Line

Nasdaq-100 Stock Index Weekly Chart with 200-week Moving Average Line