{"id":60015,"date":"2022-06-04T13:14:06","date_gmt":"2022-06-04T20:14:06","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=60015"},"modified":"2022-06-05T00:52:08","modified_gmt":"2022-06-05T07:52:08","slug":"good-employment-news-stalled-key-breakout-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2022\/06\/04\/good-employment-news-stalled-key-breakout-the-market-breadth\/","title":{"rendered":"Good Employment News Stalled Key Breakout – The Market Breadth"},"content":{"rendered":"\n

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

Good employment news came in the form of the May jobs report<\/a>. The unemployment rate stayed flat at 3.6% while the U.S. economy added 390,000 jobs. Both the number of unemployed and the unemployment rate are essentially back to the pre-pandemic levels of February, 2020. The labor force participation rate remains 1.1% points below the pre-pandemic level. The stock market stalled on this overall good news because it kept the green light on and bright for the Federal Reserve to proceed with its plans for normalizing monetary policy. Accordingly, bond yields increased on the day while stocks swooned. The pullback stalled a key breakout for the S&P 500.<\/p>\n\n\n\n

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

The S&P 500 (SPY) ended the previous week with an impressive and key breakout<\/a> above the May, 2021 low. Two subsequent days of cooling avoided challenging the new line of support from the May, 2021 low. Thursday’s 1.8% jump confirmed the breakout. Unfortunately, Friday’s 1.6% pullback made that key breakout stall.<\/p>\n\n\n\n

While the S&P 500 churns, overhead resistance from the 50-day moving average (DMA) (the red line below) is rapidly descending toward the price action. Accordingly, a resolution move, whether a breakout or fresh breakdown is imminent in coming weeks. <\/p>\n\n\n\n

I used Thursday’s surge to take profits on my June SPY call spread. I have a July 420\/430 call spread remaining. It is important to lock in some profits in a bear market when rallies work out favorably. <\/p>\n\n\n\n

\"The<\/a>
The S&P 500<\/a> (SPY) is struggling to make more progress after its impressive breakout above the resistance at the May, 2021 low. The downtrending 50DMA looms closer as more challenging resistance.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The NASDAQ (COMPQX) confirmed a breakout above its September, 2020 high. However, Friday’s 2.5% pullback stalled further progress. Instead of a key breakout, the tech-laden index ended the week in a pivot around the September, 2020 high. I used Friday’s pullback to add to my QQQ calls. <\/p>\n\n\n\n

\"The<\/a>
The NASDAQ<\/a> (COMPQX) is pivoting around the September, 2020 high.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The iShares Russell 2000 ETF (IWM) started the week with a 20DMA breakout already confirmed. So Thursday’s 2.4% surge made the ETF of small caps look ready to challenge overhead resistance from the 50DMA. Instead, the challenged stalled. Friday’s gap down and 0.9% loss left the audience in suspense. I have a June 187\/192 call option, so I will likely take profits on the first visit to the 50DMA.<\/p>\n\n\n\n

\"The<\/a>
The iShares Russell 2000 ETF<\/a> (IWM) looked ready to challenge its overhead 50DMA resistance but fell just short.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n