Follow-Through Trades: A Classic Bounce from Oversold Conditions

The Follow-Through: Bounce

Stock market traders delivered a classic bounce from oversold trading conditions. The S&P 500 (SPY) confirmed a picture-perfect test of support at its 50-day moving average (DMA). The NASDAQ (COMPQX) pulled off a picture-perfect toe tap of its lower Bollinger Band (BB). The iShares Trust Russell 2000 Index ETF (IWM) confirmed a test of the lower bound of its 2021 trading range. The bounce from oversold conditions progressed in near perfect harmony. However, IWM lost 1.6% in what could be a precursor of an expected pause from such a strong bounce from oversold.

See below for the video covering the follow-through trades to Declining Market Breadth Resolved Into An Oversold Trading Period – Above the 40 (July 19, 2021).

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Follow-through trades to Declining Market Breadth Resolved Into An Oversold Trading Period – Above the 40 (July 19, 2021).

Stocks and Indices Covered

  • S&P 500 (SPY)
  • Nasdaq (COMPQX)
  • iShares Trust Russell 2000 Index ETF (IWM)
  • volatility index (VIX)
  • Apple (AAPL)
  • Caterpillar Inc (CAT)
  • Upwork (UPWK)

Be careful out there!

Full disclosure: long AAPL calls, long UPWK, long IWM call spread, long UVXY call spread

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