Investors should not step into buy yet, even when it feels like the selling in the stock market has gone too far, according to Fairlead Strategies’ Katie Stockton, a top chart analyst. “We look for oversold buy signals in up trending markets, and yet in down trending markets like we have now, the oversold readings really aren’t necessarily a good thing,” Stockton said on CNBC’s ” Squawk Box .” The Fairlead Strategies founder and managing partner made her remarks as the market sold off on worries the economy could tip into a recession following the Federal Reserve’s aggressive rate hikes. On Thursday, the Dow Jones Industrial Average dropped below 30,000 for the first time in more than a year, falling about 700 points on the 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 stocks are due for a bounce. The chart analyst noted she is looking for the VIX to break above 38 for a capitulation signal. That, according to Stockton, could take the S & P 500 down to roughly 3,500 — or even lower. The VIX traded above 31 on Thursday. “I think 3,500 would certainly be enough to do it, just shaking people’s confidence. But I’ve noticed from a bottom up perspective, there’s a lot of names, especially in the high growth front, are still actually above their May lows, and I think that might be giving folks is a sense of safety like ‘Okay, we don’t have new breakdowns unfolding,’ but there’s so many that are right on support,” Stockton said. Stockton also said those support levels are “very fragile” and could 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 3,200 in the coming months. “So all of this kind of … suggests that there’s more downside risk,” she said.