{"id":59800,"date":"2022-05-18T00:43:29","date_gmt":"2022-05-18T07:43:29","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=59800"},"modified":"2022-05-18T01:00:44","modified_gmt":"2022-05-18T08:00:44","slug":"extended-oversold-period-ends-wth-important-breakout-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2022\/05\/18\/extended-oversold-period-ends-wth-important-breakout-the-market-breadth\/","title":{"rendered":"Extended Oversold Period Ends With Important Breakout – The Market Breadth"},"content":{"rendered":"\n

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

Federal Reserve Chair Jerome Powell reminded the market one more time<\/a> about the Fed’s determination to fight inflation with normalized monetary policy, and the market cared for the briefest of moments. After the anti-inflation dust settled, the major indices closed trading on a strong note. For example, the extended oversold period came to an end despite retailers like Walmart (WMT) weighing on the trading action<\/a>. The otherwise broadly based buying sliced the S&P 500 right through key resistance. This important breakout confirmed the end of oversold conditions and held out the tantalizing prospect of a continued rally.<\/p>\n\n\n\n

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

The S&P 500 (SPY) left behind the prospect of remaining trapped in a new churn zone between the May, 2021 low as resistance and the bear market line as support. The index’s 2.0% gain created the important breakout for the day. Follow-through buying will set up the potential for a rally right through the 20-day moving average (DMA) (the dotted line below) and to the 50DMA.<\/p>\n\n\n\n

Per my plan<\/a>, I took profits on my SPY shares. I will now switch back to call options on a higher close.<\/p>\n\n\n\n

\"The<\/a>
The S&P 500<\/a> (SPY) printed the first important breakout of the bounce out of oversold conditions. The 2.0% gain put the index over its May, 2021 resistance line.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The NASDAQ (COMPQX) came close to joining the S&P 500 with its own important breakout. The tech-laden’s index gained 2.8% and stopped trading just under the important September, 2020 high. Like the S&P 500, a confirmed breakout above this resistance would set up a run all the way to overhead 50DMA resistance.<\/p>\n\n\n\n

\"The<\/a>
The NASDAQ<\/a> (COMPQX) gained 2.8% and closed just short of its September, 2020 resistance line.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The iShares Russell 2000 ETF (IWM) is converging on both its downtrending 20DMA and the former 2022 low. These two price levels represent stiff resistance. Accordingly, a breakout above this converged resistance would signal a new bullish phase for the bounce out of oversold conditions.<\/p>\n\n\n\n

\"The<\/a>
The iShares Russell 2000 ETF<\/a> (IWM) gained 3.1% and put downtrending 20DMA resistance into view.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n