{"id":58251,"date":"2021-11-26T14:05:34","date_gmt":"2021-11-26T22:05:34","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=58251"},"modified":"2021-11-27T09:23:04","modified_gmt":"2021-11-27T17:23:04","slug":"new-covid-19-variant-new-normal-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2021\/11\/26\/new-covid-19-variant-new-normal-the-market-breadth\/","title":{"rendered":"A New COVID-19 Variant and A New Normal – The Market Breadth"},"content":{"rendered":"\n

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

News of a new 30-spike protein COVID-19 variant<\/a> sent financial markets into a tumble. The rapid news flow combined with a shortened, holiday trading day to deliver broad-based and intense selling pressure. As the market absorbs this latest blow, it should become clearer that COVID-19 is a new normal. That is, the need to accommodate the virus in every day life is here to stay for quite some time. On the whole, those who take the appropriate health measures will increase their odds of thriving over the long run of this new normal. Unfortunately, those who do not adjust to the new normal will carry heavier burdens (or cause them). The same principles apply in this stock market. This new normal means that the economy and financial markets carry higher risks even when all seems well. The market will reward speculation less and less.<\/p>\n\n\n\n

The Stock Market Indices<\/strong><\/h2>\n\n\n\n

The S&P 500 (SPY) was blithely churning at or near its all-time high for almost 3 weeks even in the face of declining market breadth<\/a>. That relative quiet came to a resounding end with today’s 2.3% loss. November’s gains are suddenly all gone. If not for the close right at the lower Bollinger Band (BB), I would have anticipated an imminent test of support at the 50-day moving average (DMA). Instead, the lower BB could act at least as a brake for downward momentum.<\/p>\n\n\n\n

\"The<\/a>
The S&P 500<\/a> (SPY) fell 2.3% and closed flat for the month of November. The close on the lower Bollinger Band (BB) should slow the path to a test of 50DMA support.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The NASDAQ (COMPQX) looks like a more volatile version of the S&P 500. The recent churn had an upward bias. The tech-laden index also delivered a much clearer reversal from the all-time high on November 22nd. The NASDAQ’s 2.2% loss, the test of the lower BB, and the complete reversal of November’s gains all mirror the S&P 500’s one-day decline. <\/p>\n\n\n\n

\"The<\/a>
Like the S&P 500, the <\/b>NASDAQ<\/a> (COMPQX) <\/b>lost 2.2% and closed flat for the month of November. The tap on the lower BB should also slow the NASDAQ’s path to a 50DMA test.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The new normal is the old normal for the iShares Russell 2000 ETF<\/a> (IWM). Last week’s completed reversal of the November breakout proved fatal. IWM is now right back to the middle of the old trading range. The breakout is a distant memory. IWM lost 3.8% but, unlike the S&P 500 and the NASDAQ, buyers took the index well off its intraday low. Without the preceding trading range, the double breakdown below support at the 50DMA and 200DMA would look extremely bearish. <\/p>\n\n\n\n

\"\"\/<\/a>
The iShares Russell 2000 ETF<\/a> (IWM) lost 3.8% on a double breakdown below its 50DMA and 200DMA. Buyers saved IWM from a 5.2% loss at the lows.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n
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I felt the same way watching $IWM<\/a> breakdown and then rebound off the lows. Perhaps the old trading range is the symbol for the go forward.<\/p>— Dr. Duru (@DrDuru) November 26, 2021<\/a><\/blockquote>