{"id":60043,"date":"2022-06-10T18:37:33","date_gmt":"2022-06-11T01:37:33","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=60043"},"modified":"2022-06-11T16:54:47","modified_gmt":"2022-06-11T23:54:47","slug":"how-bear-market-trading-beat-stocks-back-to-oversolds-edge-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2022\/06\/10\/how-bear-market-trading-beat-stocks-back-to-oversolds-edge-the-market-breadth\/","title":{"rendered":"How Bear Market Trading Beat Stocks Back to Oversold’s Edge – The Market Breadth"},"content":{"rendered":"\n

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

First, a strong jobs report unnerved the stock market<\/a>. Next, strong inflation<\/a> unraveled the stock market as bear market trading beat stocks back to oversold’s edge. Perhaps ironically, the White House sounded an early alarm bell about the inflation report<\/a> and gave market participants a head start in selling. Sellers quickly flipped the switch back to bear market trading. By the time the dust settled on the week, the major stock market indices closed with various confirmations of bear market action. These confirmations light a path back to oversold trading conditions. The Federal Reserve’s upcoming decision on monetary policy stands ominously tall as the next wildcard determining how this next trip to oversold conditions play out.<\/p>\n\n\n\n

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

Thursday’s selling delivered the return to bear market trading. The S&P 500 (SPY) lost 2.4% and sliced through the May, 2021 low that served as support after last month’s key breakout<\/a>. The bears confirmed the breakdown with the next day’s 2.9% loss. The S&P 500 even closed right at the year’s closing low which in turn was a 15-month low. I claimed earlier that the S&P 500 would not survive a third visit to the bear market line (which defines a 20% loss from the all-time high). Accordingly, I am bracing for the next oversold period to feature the index’s breakdown and close in bear market territory.<\/p>\n\n\n\n

\"The<\/a>
The S&P 500<\/a> (SPY) lost 2.9% and closed right at its 2022 low. A stay in bear market territory now looks imminent.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The NASDAQ (COMPQX) started its latest bear market journey with a 2.8% loss. That loss ended the tech-laden’s pivot around the September, 2020 high. Friday’s 3.5% loss confirmed the breakdown and the September, 2020 high as resistance. Like the S&P 500, I do not expect the NASDAQ to survive its next test of critical support. Accordingly, I expect the slip off oversold’s edge to feature the NASDAQ making new closing lows for the year. <\/p>\n\n\n\n

\"The<\/a>
The NASDAQ<\/a> (COMPQX) lost 3.5% and confirmed a bear market failure at resistance from the September, 2020 high.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The iShares Russell 2000 ETF (IWM) returned to bear market trading with a confirmation of resistance at its 50-day moving average (DMA) (the red line below). The 2.3% loss on Thursday ended my hope for a bullish breakout. Friday’s 2.7% loss further confirmed the return to bear market trading. IWM remains well off its 2022 low, so it is very possible IWM manages to cling to that low as support after the stock market slips off oversold’s edge.<\/p>\n\n\n\n

\"The<\/a>
The iShares Russell 2000 ETF<\/a> (IWM) lost 2.7% a day after confirming a bear market failure at 50DMA resistance.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n