{"id":51232,"date":"2020-01-16T23:43:54","date_gmt":"2020-01-17T07:43:54","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=51232"},"modified":"2020-01-16T23:43:59","modified_gmt":"2020-01-17T07:43:59","slug":"t2108-update-200116","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2020\/01\/16\/t2108-update-200116\/","title":{"rendered":"A Resilient Stock Market Finally Punches Into Overbought Territory – Above the 40 (January 16, 2020)"},"content":{"rendered":"\n

AT40<\/strong> = 71.2% of stocks are trading above their respective 40-day moving averages (DMAs) (overbought day #1)
AT200<\/strong> = 63.8% of stocks are trading above their respective 200DMAs (11-month high)
VIX<\/strong> = 12.3
Short-term Trading Call<\/strong>: neutral<\/p>\n\n\n\n

Stock Market Commentary<\/strong><\/h2>\n\n\n\n

Whispers of bearish divergences<\/a> are finally over.<\/p>\n\n\n\n

I did not think overbought conditions would happen anytime soon, especially after China and the U.S. signed a trade deal I figured the market already priced in. After 75 days trading under the 70% threshold that represents overbought, AT40 (T2108)<\/a>, the percentage of stocks trading above their respective 40-day moving averages (DMAs), finally got the job done.<\/p>\n\n\n\n

\"AT40
AT40 (T2108) surged through the overbought threshold at 70% for the first time in 4 months.<\/figcaption><\/figure><\/div>\n\n\n\n

The turn-around was swift, meaning that buyers rushed to find “bargains” among stocks that were lagging behind the few concentrated stocks getting most of the attention in this latest rally.<\/p>\n\n\n\n

AT200 (T2107), the percentage of stocks trading above their respective 200DMAs, was even more impressive and more bullish. AT200 continued a breakout from Wednesday to close at a near 2-year high. This achievement means this longer-term index is finally completing a reversal of its losses from the climactic peak that ended a strong year-beginning rally in 2018.<\/p>\n\n\n\n

The S&P 500 (SPY) is now in sync with the breadth indicators, but is also very stretched. The index gained 0.8% for a fresh all-time high. The S&P 500 closed above its upper Bollinger Band (BB) for the first time in a month. The move was like a delayed reaction to the official signing of a trade deal between the U.S. and China. I thought the deal would fall apart ahead of the signing, but clearly both sides were determined to get something<\/strong> done…despite most tariffs remaining in place against China through at least November, 2020.<\/p>\n\n\n\n

\"The
The S&P 500 (SPY) stretched out of a 0.8% gain. The latest all-time high took the index well above its upper Bollinger Band (BB)<\/figcaption><\/figure><\/div>\n\n\n\n

The NASDAQ (COMPQX) is as impressive as ever.<\/p>\n\n\n\n

\"The
The NASDAQ (COMPQX) jumped 1.1% as it works on a 4th month of nearly unstoppable gains.<\/figcaption><\/figure><\/div>\n\n\n\n