Investors mustn’t step into buy yet, even when it appears like the selling within the stock market has gone too far, in accordance with Fairlead Strategies’ Katie Stockton, a top chart analyst. “We search for oversold buy signals in up trending markets, and yet in down trending markets like we have now now, the oversold readings really aren’t necessarily thing,” Stockton said on CNBC’s ” Squawk Box .” The Fairlead Strategies founder and managing partner made her remarks because the market sold off on worries the economy could tip right into a recession following the Federal Reserve’s aggressive rate hikes. On Thursday, the Dow Jones Industrial Average dropped below 30,000 for the primary time in greater than a yr, falling about 700 points on the day. The S & P 500 and Nasdaq Composite fell 2.9% and three.5%, respectively. Stockton said that indicators corresponding to the Cboe Volatility Index, or VIX, have yet to indicate that stocks are due for a bounce. The chart analyst noted she is searching for the VIX to interrupt above 38 for a capitulation signal. That, in accordance with Stockton, could take the S & P 500 right down to roughly 3,500 — and even lower. The VIX traded above 31 on Thursday. “I feel 3,500 will surely be enough to do it, just shaking people’s confidence. But I’ve noticed from a bottom up perspective, there’s a number of names, especially within the high growth front, are still actually above their May lows, and I feel that could be giving folks is a way of safety like ‘Okay, we do not have recent breakdowns unfolding,’ but there’s so many which might be right on support,” Stockton said. Stockton also said those support levels are “very fragile” and could possibly be taken out. Should Wall Street see two weekly closes below 3,815, the analyst said the broad market index could fall even further to three,200 in the approaching months. “So all of this type of … suggests that there is more downside risk,” she said.