{"id":55933,"date":"2021-02-13T16:54:45","date_gmt":"2021-02-14T00:54:45","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=55933"},"modified":"2021-02-15T08:44:29","modified_gmt":"2021-02-15T16:44:29","slug":"t2108-update-a-new-low-in-volatility-brought-fresh-promise-to-overbought-stock-market","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2021\/02\/13\/t2108-update-a-new-low-in-volatility-brought-fresh-promise-to-overbought-stock-market\/","title":{"rendered":"A New Low in Volatility Brought Fresh Promise to Overbought Stock Market – Above the 40 (February 12, 2021)"},"content":{"rendered":"\n

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

After sweeping away bearish signals<\/a>, 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<\/a> almost a year ago ahead of the coronavirus pandemic. So even after a string of all-time highs for over three months, an overbought stock market received fresh promise from further lows in volatility.<\/p>\n\n\n\n

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

The S&P 500 (SPY) gained 1.6% for the week with a third of the gains coming on Friday. Ahead of a speech from Federal Reserve Chair Jerome Powell<\/a>, the index took a sudden dive. Given I was on the edge of bearishness, I got trigger happy and bought SPY put options expiring next Friday. I watched as the puts quickly grew profitable and went back to flat. They ended the week with a small loss. Since I still do not quite understand what drove the “fat finger” whoosh downward, I am keeping the puts as another hedge to all the longs I am likely to buy in the coming week.<\/p>\n\n\n\n

\"The<\/a>
The S&P 500 (SPY)<\/a> ended the week with a 0.5% gain and new marginal all-time high.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n
\"\"\/<\/a>
On the way to closing the week at an all-time high, the S&P 500 abruptly faded from a strong open. The 15-minute chart shows the churn and its eventual resolution.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The NASDAQ (COMPQX) followed along with the S&P 500. The tech laden index gained 1.7% for the week on its way to a new marginal all-time high.<\/p>\n\n\n\n

\"The<\/a>
The NASDAQ<\/a> (COMPQX) gained 0.5% and closed the week with a new marginal all-time high.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n