{"id":53398,"date":"2020-06-20T18:32:36","date_gmt":"2020-06-21T01:32:36","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=53398"},"modified":"2020-06-20T20:32:11","modified_gmt":"2020-06-21T03:32:11","slug":"t2108-update-200619","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2020\/06\/20\/t2108-update-200619\/","title":{"rendered":"Overbought Period Ends With A Trapped S&P 500 – Above the 40 (June 19, 2020)"},"content":{"rendered":"\n

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

AT40<\/strong> = 68.7% of stocks are trading above their respective 40-day moving averages (DMAs) (ended 5 days overbought, over 70%)
AT200<\/strong> = 25.7% of stocks are trading above their respective 200DMAs
VIX<\/strong> = 35.1
Short-term Trading Call<\/strong>: neutral<\/p>\n\n\n\n

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

When the NBA suspended\/cancelled its basketball season in March, I wrote about how that event symbolized the non-linearity of the pandemic and the accompanying economic crisis<\/a>. The volatility index was persistently high, and I braced for more stock market crashes and more stock market extremes. Three months later, the U.S. and other countries are forcing the issue of reopening economies even as coronavirus cases surge<\/a> (as expected). Apple (AAPL) provided a fresh symbol of the economic side of the pandemic after announcing a closure of its stores in select coronavirus hotspots<\/a>. Apple did not react with a mass, “safer than sorry” closure of all stores.<\/p>\n\n\n\n

In this new phase, a menagerie of localized responses will cause confusion and perhaps even create conflicting signals. Aggregated data will become harder to interpret. In this context, I expect a more tentative stock market where, like the previous week, the big moves will be dominated by downside risk.<\/p>\n\n\n\n

The Stock Market Indices<\/strong><\/h3>\n\n\n\n

The S&P 500 (SPY) is starting to look like it is trapped between its 2019 close and its 200-day moving average (DMA). Like so many stocks that I described in the last Above the 40<\/a> post, the index looks like it is in limbo. Once the 50DMA converges with the 200DMA, the developing trading range will take on even more significance. A breakout or breakdown should be very tradable. <\/p>\n\n\n\n

\"The<\/a>
The S&P 500 (SPY) lost 0.6% as it pressed against its 20DMA.<\/figcaption><\/figure><\/div>\n\n\n\n