{"id":60936,"date":"2022-08-10T20:22:25","date_gmt":"2022-08-11T03:22:25","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=60936"},"modified":"2022-08-10T21:21:41","modified_gmt":"2022-08-11T04:21:41","slug":"inflation-readout-drives-faekout-ends-one-bear-market-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2022\/08\/10\/inflation-readout-drives-faekout-ends-one-bear-market-the-market-breadth\/","title":{"rendered":"Inflation Readout Drives A Fakeout and Ends One Bear Market – The Market Breadth"},"content":{"rendered":"\n

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

The stock market threw a big fakeout, the biggest I have seen in a long time. Just yesterday, a synchronized failure at key resistance levels<\/a> from the major indices combined with a drop from overbought conditions to convince me to get (cautiously) bearish on the stock market. The read on July CPI<\/a> (consumer price index) had other ideas. “Consensus” expected 8.7% and the inflation gods delivered a “surprise” of 8.5% (core was 5.9%). That was enough for the the stock market to resume its bullish behavior with a jump back into overbought trading conditions. Moreover, two of the three major indices punched through the key resistance that just looked solid. Needless to say, I did not expect that such a minor surprise could generate such a major response. The peak inflation narrative<\/a> has already been strong since the readout on the May and June CPIs. So the market’s celebration makes little sense in that context. However, I do not want to join the incredulous bears with the market refueling its engines so convincingly.<\/p>\n\n\n\n

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

The S&P 500 (SPY) surged 2.1% and finally cleared resistance from the June highs. The index is now up 1.9% since the end of April (again, so much for sell in May<\/a>), and it looks poised to challenge resistance from its 200-day moving average (DMA) (the blue line below). The entire period of former churn looks like a big fakeout. The S&P 500’s breakout from this churn is just as significant as the index’s breakdown from the churn that formed resistance at the June highs.<\/p>\n\n\n

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\"The<\/a>
The S&P 500 (SPY) surged 2.1% and finally broke free of resistance at its June highs.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n

The NASDAQ (COMPQ) also had an impressive move with a 2.9% gain. However, the tech laden index did not quite bring its bear market to an end. Accordingly, the NASDAQ still needs one more up day to solidify the return of bullish technicals.<\/p>\n\n\n

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\"The<\/a>
The NASDAQ (COMPQ) jumped 2.9% and closed right on its bear market line. The NASDAQ is even up 4.2% since the close of April.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n

The iShares Russell 2000 ETF (IWM) joined the S&P 500 in clearing a major hurdle with a notable fakeout. The bear market ended for the ETF of small caps with a 2.9% gain just one day after a 1.4% loss seemed to confirm the survival of the bear market. Resistance from the downtrending 200DMA now looms directly overhead.<\/p>\n\n\n

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\"The<\/a>
The iShares Russell 2000 ETF (IWM) gained 2.9% and brought its bear market to an end.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n