{"id":66913,"date":"2023-12-16T16:24:33","date_gmt":"2023-12-17T00:24:33","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=66913"},"modified":"2023-12-18T07:23:18","modified_gmt":"2023-12-18T15:23:18","slug":"fed-further-stretched-overbought-conditions-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/16\/fed-further-stretched-overbought-conditions-the-market-breadth\/","title":{"rendered":"The Fed Further Stretched Overbought Conditions – The Market Breadth"},"content":{"rendered":"\n

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

For traders like myself who follow market cycles from extreme fear to extreme euphoria, last week’s trading action was astonishing. The stock market was already well overbought<\/a> and stretched going into Wednesday’s Federal Reserve meeting. Yet, buyers STILL managed to go into extreme stretch mode. The Federal Reserve essentially declared the death of inflation<\/a>, and buyers snatched almost everything not nailed down. The Fed further stretched overbought conditions with only minimal signs of cooling on Friday after New York Federal Reserve President John Williams insisted that the Fed is NOT talking about rate cuts<\/a>. The full CNBC interview suggested Williams had a quibble with semantics as he talked about bringing policy down over 3 years or “over the course of time.”<\/p>\n\n\n\n

The stock market now looks set to follow through on a historical pattern of strength following a strong performance going into July. From “What historically happens after stocks soar through July<\/a>” in Yahoo Finance on the S&P 500: “…when the January-through-July returns were 10% or more…these years return on average 4.8% from August to December with 95% of the results positive.” This year, the S&P 500 was up 19.5% through the end of July thanks to the summer of loving stocks<\/a>. The market swooned from there until a bottom coming out of October’s oversold trading<\/a>. The incredible subsequent rally brought the S&P 500 all the way back to a 2.8% gain since the end of July. History is back on track. Fortunately, I kept this analysis in my back pocket after I wrote about it at the end of July<\/a>.<\/p>\n\n\n\n