{"id":60924,"date":"2022-08-09T20:40:31","date_gmt":"2022-08-10T03:40:31","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=60924"},"modified":"2022-08-10T20:53:31","modified_gmt":"2022-08-11T03:53:31","slug":"resolution-after-a-one-day-overbought-period-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2022\/08\/09\/resolution-after-a-one-day-overbought-period-the-market-breadth\/","title":{"rendered":"Resolution After A One-Day Overbought Period – The Market Breadth"},"content":{"rendered":"\n

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

The stock market took one more day to get resolution on the technical signals flashing from market breadth<\/a>. A drop from overbought conditions triggered a bearish market signal. Failures at important resistance from the S&P 500, the NASDAQ, and IWM each reinforced the bearish signal. However, the relatively mild trading action and the reluctant response from the volatility index suggest that the next phase of trading could look more like churn than an outright reversal.<\/p>\n\n\n\n

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

The S&P 500 (SPY) only fell 0.4% but still confirmed resistance at the top of the June highs. Given the index has essentially gone nowhere for almost two weeks, trading churn above support from the May, 2021 low looks more likely than a complete breakdown in the immediate term.<\/p>\n\n\n

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\"The<\/a>
The S&P 500 (SPY) confirmed its failure at resistance from the June high. The index looks ready to concede to churn above support from the May, 2021 low.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n

The NASDAQ (COMPQ) generated a bigger disappointment than the S&P 500 yesterday<\/a>. The tech-laden index made a more significant move again today. The NASDAQ fell 1.2% and definitively confirmed resistance at overhead resistance from the bear market line. Now in play is a test of converging support from the uptrending 20-day moving average (DMA) (the dotted line below) and the September, 2020 high.<\/p>\n\n\n

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\"The<\/a>
The NASDAQ (COMPQ) confirmed resistance at its bear market line with a 1.2% loss.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n

The iShares Russell 2000 ETF (IWM) joined the NASDAQ by definitively confirming resistance at its bear market line. The ETF of small caps lost 1.4% but held on to a steep uptrend. Still, I took remaining profits on my IWM call spread right at the open. A test of uptrending 20DMA support is now in play following IWM’s fakeout of outperformance.<\/p>\n\n\n

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\"The<\/a>
The iShares Russell 2000 ETF (IWM) confirmed resistance at its bear market line with a 1.4% loss.<\/strong><\/em><\/figcaption><\/figure>\n<\/div>\n\n\n