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

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

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

A Downward Drift Broke Overbought Conditions in the Stock Market – Above the 40 (February 18, 2021)

Stock Market Commentary The new low in volatility that appeared to breathe new life and promise to the overbought period fizzled out. The major indices experienced a downward drift, and the general market struggled to hold onto overbought conditions. The trading drift finally broke below the overbought threshold. The Stock Market Indices The S&P 500 … Read more

A New Low in Volatility Brought Fresh Promise to Overbought Stock Market – Above the 40 (February 12, 2021)

Stock Market Commentary After sweeping away bearish signals, the stock market moved right into overbought territory last week. The week started with a small gap up to all-time highs, and the stock market never looked back. More importantly, the volatility index (VIX) hit a new low since the stock market broke down almost a year … Read more

Stock Market Almost Overbought After Sweeping Away Bearish Signals – Above the 40 (February 5, 2020)

In a major display of buying power, AT40 (T2108) surged from 41% to 69% in just a week's time.

Stock Market Commentary Sellers beat a hasty retreat from the stock market as another bearish signal enjoyed a fleeting existence. The last bearish period lasted about three days. The previous bearish period barely survived a day. The stock market’s ability to quickly wipe away bearish signals is impressive. The buying force over the last week … Read more