Follow-Through Trades: A Classic Bounce from Oversold Conditions

The Follow-Through: Bounce 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 FOLLOW Dr. Duru’s commentary on financial markets … Read more

Declining Market Breadth Resolved Into An Oversold Trading Period – Above the 40 (July 19, 2021)

Stock Market Commentary Unlike the months long process of declining market breadth, the resolution into an oversold trading period came swift, fast, and in a hurry. I thought my wait for an oversold trading period would last more days and weeks. Instead, a further plunge in market breadth combined with other important price signals to … Read more

Back to the Regularly Scheduled Stock Market Melt-Up – Above the 40 (July 10, 2021)

Stock Market Commentary The stock market melt-up took a one day break. The signs of trouble were ever more clear ahead of the break. Something was wrong with the picture in the stock market. Yet, sellers could barely follow through. The S&P 500 stumbled with a gap down, but buyers stepped right back in at … Read more

Small Cap Stocks Lead Important Breakout for Market Breadth Indicator – Above the 40 (June 1, 2021)

Stock Market Commentary A meme rush pushed the stock market toward summer trading. A breakout for market breadth launched summer trading. Small cap stocks appeared to lead the way even as the S&P 500 and the NASDAQ wilted for the close of trading. The divergence still leaves the stock market poised for an eventual rendezvous … Read more

A Meme Rush Pushes Stocks to the Summer Trading Season – Above the 40 (May 28, 2021)

Stock Market Commentary Summer trading in the U.S. traditionally starts after the Memorial Day holiday weekend. The period typically features lower levels of liquidity and, accordingly, periods of listless trading interrupted by bursts of wild volatility. While the “sell in May and go away” adage is a poor trading strategy, August is the year’s most … Read more

Stock Market Rebounded from the Brink of A Real Sell-Off – Above the 40 (May 14, 2021)

Stock Market Commentary Last week featured yet another episode of momentary panic proceeded by a virtual “all clear” signal. In the middle of the week, the S&P 500 (SPY) broke down just as the stock market hit extremes. Subsequently, buyers stepped into the breach. As a result, the very next day, the stock market rebounded … Read more

The S&P 500 Broke Down Just As the Stock Market Hit Extremes – Above the 40 (May 12, 2021)

AT40 (T2108) plunged from 59.7% to 38.1% in 3 days for its lowest close in 6 months.

Stock Market Commentary The S&P 500 (SPY) finally broke down and succumbed to the selling pressure building up in the stock market. A “surprise” surge in inflation as measured by the Consumer Price Index (CPI) delivered the headline catalyst for a day of broad-based selling. Given market breadth was already in the process of narrowing, … Read more

Stock Buyers Break Important Downtrend Only to Get Stymied Again – Above the 40 (April 30, 2021)

Stock Market Commentary Last week featured an intense barrage of earnings reports. The collective response on the major indices was a major yawn. The S&P 500 finished flat for the week. The NASDAQ and the iShares Trust Russell 2000 Index ETF both softened by 0.4%. Financials were a notable exception as the Financial Select Sector … Read more

A Week Where Big Cap Tech Took Over from the Growth Tantrum – Above the 40 (April 9, 2021)

Stock Market Commentary A week ago, the fading of the growth tantrum further solidified my bullish read on the stock market. Last week, big cap tech took over from the growth tantrum. Buyers passed the baton in impression fashion but left small caps behind. Regardless, market dips are attracting buyers in a rotating fashion. The … Read more

Tricky Trading Quickly Took Stocks from Strength to Weakness – Above the 40 (February 26, 2021)

Stock Market Commentary The stock market got quite tricky last week. A day after buyers re-established control, sellers returned with a sustained fury. The selling on Thursday reflected the stock market’s split personality while the follow-up selling on Friday seemed broader. The pressure on the the stock market looks like an ominous setup for March … Read more