According to top chart analyst Fairlead Strategies Katie Stockton, investors shouldn’t step into buying just yet, even if it looks like the stock market selling has gone too far. “We look for oversold buy signals in up trending markets, and yet in down trending markets like we have, oversold readings are really not a good thing,” Stockton said on CNBC’s “Squawk Box.” The founder and managing partner of Fairlead Strategies made his remarks as markets sold off on concerns the economy could slide into a recession after the Federal Reserve’s aggressive rate hikes. On Thursday, the Dow Jones Industrial Average fell below 30,000 for the first time in more than a year, falling nearly 700 points that day. The S&P 500 and Nasdaq Composite fell 2.9% and 3.5%, respectively. Stockton said that indicators such as the Cboe Volatility Index, or VIX, have yet to show that the stock is on the verge of a rally. The chart analyst noted that she is looking for the VIX to break above 38 for a capitulation signal. That could move the S&P 500 to around 3,500 — or even less, according to Stockton. On Thursday, the VIX was trading above 31. “I think 3,500 will certainly be enough to do that, just shaking people’s confidence. But I have seen from a bottom-up perspective, there are a lot of names, especially on the high growth front, right now. are also actually above their May lows, and I think that might give people a sense of security like ‘Okay, we don’t have new breakdowns coming out,’ but there are a lot of people who are on support. Right,” Stockton said. Stockton also said that those support levels are “very fragile” and can be removed. Should Wall Street see two weekly closes below 3,815, the analyst said the broader market index could fall further to 3,200 in the coming months. “So all of these … suggest there is more downside risk,” she said.