An Indicator of Stock Market Breadth Nears An Important Milestone

The stock market convincingly followed through on last week’s bullish divergence that indicated strengthening stock market breadth. At the time of the bullish divergence, AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), powered higher even as the S&P 500 (SPY) lost 1.0%. The index also suffered a 50DMA breakdown. … Read more

The Volatility Index During Oversold Periods In the Stock Market

When the stock market last flipped to oversold trading conditions, I expected at least one more spike in the volatility index (VIX) before oversold trading ended. I define oversold as a period of trading in the stock market when AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), closes below … Read more

The Top 1 Percent Even Rules the Stock Market: Divergences with Elites

Sam Ro is a managing editor at Yahoo Finance. Ro’s tweet with data from FactSet and Goldman Sachs (GS) shows how just 5 stocks – Facebook (FB), Amazon.com (AMZN), Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG) – dominate the S&P 500 (SPY). The top 1 percent seem to be the only story worth telling given … Read more

Stock Market Risk and Reward from Rising VIX and End of Overbought Period

AT40 (T2108) closed at 68.7% and once again dropped out of overbought trading conditions.

The financial markets have presented numerous extremes during the coronavirus pandemic. I rely on the percentage of stocks trading above their respective 40-day moving averages (DMAs), aka AT40 (T2108), as a measure of oversold (below 20%) and overbought (above 70%) extremes in the stock market. In just three months, the stock market went from printing … Read more

Overbought Trading Conditions Come to A Swift and Ominous End – Above the 40 (May 1, 2020)

Stock Market Statistics AT40 = 68.6% of stocks are trading above their respective 40-day moving averages (DMAs) (ending 2 days overbought)AT200 = 12.2% of stocks are trading above their respective 200DMAsVIX = 37.2Short-term Trading Call: neutral Stock Market Commentary The Federal Reserve’s last statement on monetary policy may go down as the short-term peak in … Read more

A $2.3 Trillion End to An Extreme Oversold Period in the Stock Market – Above the 40 (April 10, 2020)

AT40 = 24.4% of stocks are trading above their respective 40-day moving averages (DMAs) (ended 31-day oversold period)AT200 = 10.9% of stocks are trading above their respective 200DMAsVIX = 41.7Short-term Trading Call: cautiously bullish Stock Market Commentary “The Federal Reserve on Thursday took additional actions to provide up to $2.3 trillion in loans to support … Read more

An Oversold Stock Market Full of Extremes Makes Fresh Bid On A Bottom – Above the 40 (March 13, 2019)

AT40 = 3.0% of stocks are trading above their respective 40-day moving averages (DMAs) (13th oversold day)AT200 = 6.5% of stocks are trading above their respective 200DMAsVIX = 57.8 (down 23.4%)Short-term Trading Call: bullish Stock Market Commentary The stock market experienced another historic day as the bear market takes on more twists and turns. The … Read more

An Ugly Weekly Gain for An Extremely Oversold Stock Market – Above the 40 (March 6, 2020)

AT40 = 9.4% of stocks are trading above their respective 40-day moving averages (DMAs) (8th oversold day)AT200 = 23.2% of stocks are trading above their respective 200DMAsVIX = 41.9Short-term Trading Call: bullish Stock Market Commentary The Shake and Bake bottom barely held as support last week. It was a week of dramatic ups and downs … Read more

Being Oversold Is Reason Enough for Buying the Stock Market – Above the 40 (March 4, 2020)

AT40 = 17.5% of stocks are trading above their respective 40-day moving averages (DMAs) (6th oversold day)AT200 = 32.9% of stocks are trading above their respective 200DMAsVIX = 32.0Short-term Trading Call: bullish Stock Market Commentary Was it a delayed response to the emergency rate cut from the Federal Reserve? Was it the big comeback by … Read more

Shake and Bake Does A Bottom Make – Above the 40 (February 28, 2020)

AT40 = 7.0% of stocks are trading above their respective 40-day moving averages (DMAs) (oversold day #3, dropped as low as 5.1%)AT200 = 21.4% of stocks are trading above their respective 200DMAs (13-month low, dropped as low as 17.8%)VIX = 40.1 (was as high as 49.5%)Short-term Trading Call: bullish Stock Market Commentary Oversold I had … Read more