{"id":53811,"date":"2020-07-24T22:38:08","date_gmt":"2020-07-25T05:38:08","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=53811"},"modified":"2020-07-28T06:48:49","modified_gmt":"2020-07-28T13:48:49","slug":"t2108-update-stocks-unwind-ahead-of-key-stimulus-decisions-earnings","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2020\/07\/24\/t2108-update-stocks-unwind-ahead-of-key-stimulus-decisions-earnings\/","title":{"rendered":"Stocks Unwind Ahead of Key Stimulus Decisions and Earnings – Above the 40 (July 24, 2020)"},"content":{"rendered":"\n

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

AT40<\/strong> = 53.8% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200<\/strong> = 33.5% of stocks are trading above their respective 200DMAs
VIX<\/strong> = 25.8
Short-term Trading Call<\/strong>: neutral<\/p>\n\n\n\n

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

AT40 (T2108)<\/a>, the percentage of stocks trading above their respective 40-day moving averages (DMAs), barely budged all week even as the stock market experienced sharp moves, especially with big-cap tech<\/a> initiating a big unwind. The setups I described in the last Above the 40 post<\/a> quickly materialized on Monday, and I rushed to chase some of the follow-through. Given I was late, I chose calendar call spreads on weeklies expiring over the next two weeks. This choice turned out to be fortuitous given the tech pullbacks that dominated the rest of the week.<\/p>\n\n\n\n

The stock market is now bracing for earnings from 4 of the 5 top 1 percent of S&P 500 stocks<\/a> as well as news from Congress on the next round of assistance for Americans still suffering from the fallout from the coronavirus pandemic. The Federal Reserve will also announce its next pronouncements on monetary policy; no doubt the Fed stands ready to lean against any persisting unwind in stocks. The Fed in particular may need to stand up as a loud cheerleader for more stimulus if Congress continues to waffle.<\/p>\n\n\n\n

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

The S&P 500 (SPY) started the week with a 0.8% gain and a breakout to a small year-to-date gain. The cheer lasted two more days before two days of selling unwound the small breakout. Strong selling in the top 1 percent of the index<\/a> led the way downward. <\/p>\n\n\n\n

\"The<\/a>
The S&P 500 (SPY) lost 0.6% and lost its recent breakout.<\/figcaption><\/figure><\/div>\n\n\n\n