{"id":66982,"date":"2023-12-23T22:41:32","date_gmt":"2023-12-24T06:41:32","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=66982"},"modified":"2023-12-23T22:41:33","modified_gmt":"2023-12-24T06:41:33","slug":"extended-overbought-rally-quickly-overcomes-third-strike-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/23\/extended-overbought-rally-quickly-overcomes-third-strike-the-market-breadth\/","title":{"rendered":"The Extended Overbought Rally Quickly Overcomes Its Third Strike &#8211; The Market Breadth"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\"><strong>Stock Market Commentary<\/strong><\/h2>\n\n\n\n<p>After the stock market rally suffered <a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/02\/buyers-get-a-hit-and-dash-into-overbought-conditions-the-market-breadth\/\">strike one<\/a> and <a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/07\/appreciating-yen-is-rallys-second-strike-the-market-breadth\/\">strike two<\/a>, Wednesday&#8217;s sudden pullback had all the signatures of a third strike to start the end of <a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/16\/fed-further-stretched-overbought-conditions-the-market-breadth\/\">the extended overbought rally<\/a>. Sellers surged in the final 90 minutes of trading that day. However, they failed to sustain the stampede for the exits. Buyers went right back to work the final two days of the week and left pundits and the like scratching their heads even more trying to explain the trading action for the week. In review, it looks like the extended overbought rally flexed its muscles and dominated sentiment. One of the pundits on CNBC&#8217;s Fast Money confidently nailed the call on Wednesday: &#8220;I think this was a one-day event.&#8221; Now the runway looks clear for the extended overbought rally to extend into year-end.<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Market sell-off!<br><br>Stocks breaking their almost 10-day win streak.<a href=\"https:\/\/twitter.com\/GuyAdami?ref_src=twsrc%5Etfw\">@guyadami<\/a> <a href=\"https:\/\/twitter.com\/grassosteve?ref_src=twsrc%5Etfw\">@grassosteve<\/a> <a href=\"https:\/\/twitter.com\/KARInvest?ref_src=twsrc%5Etfw\">@karinvest<\/a>&#39;s Julie Biel and <a href=\"https:\/\/twitter.com\/karenfinerman?ref_src=twsrc%5Etfw\">@karenfinerman<\/a> try to make sense of the pullback. <a href=\"https:\/\/t.co\/gig1Vq8zXt\">pic.twitter.com\/gig1Vq8zXt<\/a><\/p>&mdash; CNBC&#39;s Fast Money (@CNBCFastMoney) <a href=\"https:\/\/twitter.com\/CNBCFastMoney\/status\/1737603987736547402?ref_src=twsrc%5Etfw\">December 20, 2023<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Everyone&#8217;s favorite permabull Tom Lee was even more confident in his interpretation of Wednesday&#8217;s &#8220;profit-taking&#8221;: &#8220;&#8230;65% of fund managers are underperforming their benchmarks&#8230;.$24 billion was pulled out of equities. Between now year-end&#8230;fund managers are trying to catch up, and a lot of investors are reorienting their portfolios towards a nicer Fed.&#8221;<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Stock market&#039;s sharp sell-off looks like &#039;profit taking,&#039; says Fundstrat&#039;s Tom Lee\" width=\"1200\" height=\"675\" src=\"https:\/\/www.youtube.com\/embed\/tij-60NMBN4?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<br><script async=\"\" src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\n<ins class=\"adsbygoogle\" style=\"display:block; text-align:center;\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\" data-ad-client=\"ca-pub-1196033822186410\" data-ad-slot=\"3478942445\"><\/ins>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><br>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Stock Market Indices<\/strong><\/h2>\n\n\n\n<p>The S&amp;P 500 (SPY) dropped 1.5% on Wednesday. Buyers almost reversed the entire loss by the close on Friday. With the index peeled off its upper Bollinger Band (BB), trading conditions are no longer quite so extended. However, the uptrending 20-day moving average (DMA) is practically begging for a test whenever the extended overbought rally takes a real rest. On the flip side, the all-time high sits a tantalizing 50 points away.<\/p>\n\n\n<div class=\"wp-block-image is-style-default\">\n<figure class=\"aligncenter size-full is-resized\"><a href=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-SP-500-SPY.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1610\" height=\"794\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-SP-500-SPY.png\" alt=\"Buyers got right back to work after the S&amp;P 500 (SPY) abruptly ended its upper Bollinger Band walk with a 1.5% slide.\" class=\"wp-image-66969\" style=\"width:840px;height:419px\" title=\"S&amp;P 500 (SPY)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-SP-500-SPY.png 1610w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-SP-500-SPY-768x379.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-SP-500-SPY-1536x758.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-SP-500-SPY-1320x651.png 1320w\" sizes=\"auto, (max-width: 1610px) 100vw, 1610px\" \/><\/a><figcaption class=\"wp-element-caption\"><strong><em>Buyers got right back to work after the S&amp;P 500 (SPY) abruptly ended its upper Bollinger Band walk with a 1.5% slide.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-5e6b19ed wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/drduru.com\/onetwentytwo\/subscribe-free\/\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:#0693e3\" class=\"has-inline-color has-white-color\">Join the One-Twenty Two Mailing List for Free<\/mark><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<p>The NASDAQ (COMPQ) is still well off its all-time high, but buyers completely reversed Wednesday&#8217;s 1.5% loss. Thus, the tech-laden index looks ready to resume its march toward the all-time high set over 2 years ago. Looking back, I can see now how the NASDAQ created a definitive upside resolution to the Bollinger Band squeeze earlier in the month. <\/p>\n\n\n<div class=\"wp-block-image is-style-default\">\n<figure class=\"aligncenter size-full is-resized\"><a href=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-NASDAQ-COMPQ.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1612\" height=\"795\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-NASDAQ-COMPQ.png\" alt=\"The NASDAQ (COMPQ) fully recovered from its abrupt slide off the upper Bollinger Band.\" class=\"wp-image-66970\" style=\"aspect-ratio:2;width:840px;height:auto\" title=\"NASDAQ (COMPQ)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-NASDAQ-COMPQ.png 1612w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-NASDAQ-COMPQ-768x379.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-NASDAQ-COMPQ-1536x758.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-NASDAQ-COMPQ-1320x651.png 1320w\" sizes=\"auto, (max-width: 1612px) 100vw, 1612px\" \/><\/a><figcaption class=\"wp-element-caption\"><strong><em>The NASDAQ (COMPQ) fully recovered from its abrupt slide off the upper Bollinger Band.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>The iShares Russell 2000 ETF (IWM) slid 2.3% on Wednesday. The ETF of small caps made an even stronger comeback than the other two major indices. IWM ended the week at a fresh 21-month high. The rebound on Thursday took me out of a calendar call spread with profits. I reloaded on a position on Friday&#8217;s breakout. More than ever, IWM looks done with its bear market. So as long as IWM trades above the bear market line, I want to aggressively buy its dips. Note IWM is also one of the strongest supporters of extended overbought conditions.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><a href=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-iShares-Russell-2000-ETF-IWM.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1609\" height=\"793\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-iShares-Russell-2000-ETF-IWM.png\" alt=\"The iShares Russell 2000 ETF (IWM) stands tall above its bear market line, now at its highest point since April 2022.\" class=\"wp-image-66971\" style=\"aspect-ratio:1.995249406175772;width:840px;height:auto\" title=\"iShares Russell 2000 ETF (IWM)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-iShares-Russell-2000-ETF-IWM.png 1609w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-iShares-Russell-2000-ETF-IWM-768x379.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-iShares-Russell-2000-ETF-IWM-1536x757.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-iShares-Russell-2000-ETF-IWM-1320x651.png 1320w\" sizes=\"auto, (max-width: 1609px) 100vw, 1609px\" \/><\/a><figcaption class=\"wp-element-caption\"><strong><em>The iShares Russell 2000 ETF (IWM) stands tall above its bear market line, now at its highest point since April 2022.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>The Short-Term Trading Call With Extended Overbought Conditions<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>AT50<\/strong> (MMFI) = 84.1% of stocks are trading above their respective 50-day moving averages (16th overbought day)<\/li>\n\n\n\n<li><strong>AT200<\/strong> (MMTH) = 65.4% of stocks are trading above their respective 200-day moving averages<\/li>\n\n\n\n<li><strong>Short-term Trading Call<\/strong>: neutral<\/li>\n<\/ul>\n\n\n\n<p>AT50 (MMFI), the percentage of stocks trading above their respective 50DMAs, extended overbought conditions to a 16th straight day. At 84.1%, my favorite technical indicator sits at a near 3-year high. As a reminder, <a href=\"https:\/\/drduru.com\/onetwentytwo\/t2108-resource-page\/\">these overbought conditions are NOT themselves bearish<\/a>. Trading conditions only get bearish once the overbought period ends. Aggressive bears could get excited if the market generates a blow-off top technical pattern. Otherwise, the path of least resistance belongs to the buyers. In the meantime, I remain neutral so that I am mentally prepared for the eventual end of the extended overbought period. <\/p>\n\n\n\n<p>Note in the chart below I previously defined an extended overbought period by the historical point where I no longer expect a negative end to the overbought period. There are precious few overbought periods that achieved such a hurdle so I am now using a looser definition).<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"660\" height=\"446\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2020\/12\/201223_SP500-Performance-Overbought.jpg\" alt=\"Performance of the S&amp;P 500 (SPY) After An Overbought Period Ends\" class=\"wp-image-55506\"\/><figcaption class=\"wp-element-caption\"><strong><em>Performance of the S&amp;P 500 (SPY) After An Overbought Period Ends<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>As Wednesday&#8217;s selling unfolded, I reached for a Caterpillar, Inc (CAT) put option as my favorite hedge. Once it looked like Wednesday&#8217;s selling was a false alarm, I took a small profit. However, on Friday, I bought a fresh put option. With the extended overbought period at 16 days, I will be more active in reaching for such hedges when I see smoke. Last week CAT broke out to a new all-time high and then stalled. So the stock&#8217;s behavior from here could be one of my key tells for the market.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1607\" height=\"796\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Caterpillar-Inc-CAT.png\" alt=\"The parabolic run-up for Caterpillar Inc (CAT) stumbled right at a new all-time high.\" class=\"wp-image-66972\" style=\"width:840px;height:auto\" title=\"Caterpillar Inc (CAT)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Caterpillar-Inc-CAT.png 1607w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Caterpillar-Inc-CAT-768x380.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Caterpillar-Inc-CAT-1536x761.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Caterpillar-Inc-CAT-1320x654.png 1320w\" sizes=\"auto, (max-width: 1607px) 100vw, 1607px\" \/><figcaption class=\"wp-element-caption\"><strong><em>The parabolic run-up for Caterpillar Inc (CAT) stumbled right at a new all-time high.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p><a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/06\/11\/looming-collision-between-overbought-trading-and-fed-the-market-breadth\/\">In early June<\/a>, I made the case for CarGurus Inc (CARG) as a breakout play with less risk than Carvana (CVNA). I happened to take profits ahead of <a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/08\/06\/overbought-conditions-slip-into-apple-topping-the-market-breadth\/\">an awful earnings warning two months later<\/a>. Interestingly, most of the selling pressure dissipated from there. Investors turned happy all over again after November earnings. CARG has glided with the market&#8217;s coattails ever since then. CARG closed last week at a 16-month high. Unfortunately, I missed this entire move!<\/p>\n\n\n\n<p>I point to CARG as another classic example demonstrating how the market can show it &#8220;knows nothing&#8221; about a company&#8217;s prospects. CARG is back on my watchlist of bullish stocks.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1613\" height=\"797\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-CarGurus-Inc-CARG.png\" alt=\"CarGurus Inc (CARG) managed to retain its steady uptrend, reaching as high as this July.\" class=\"wp-image-66973\" style=\"width:840px;height:auto\" title=\"CarGurus Inc (CARG)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-CarGurus-Inc-CARG.png 1613w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-CarGurus-Inc-CARG-768x379.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-CarGurus-Inc-CARG-1536x759.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-CarGurus-Inc-CARG-1320x652.png 1320w\" sizes=\"auto, (max-width: 1613px) 100vw, 1613px\" \/><figcaption class=\"wp-element-caption\"><strong><em>CarGurus Inc (CARG) managed to retain its steady uptrend, reaching as high as this July.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>Wingstop, Inc (WING) continues to astound me. The buying has pushed nearly nonstop since November earnings. After the 1-day 7.5% post-earnings gain, WING is up another 31.4%. I was too slow in pivoting <a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/10\/07\/why-oversold-matters-jobs-dip-and-rip-the-market-breadth\/\">my attitude about WING from bearish<\/a> to bullish. So now I can only look back and ponder &#8220;what if&#8221;&#8230;.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1613\" height=\"793\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Wingstop-Inc-WING.png\" alt=\"\" class=\"wp-image-66974\" style=\"width:840px;height:auto\" title=\"Wingstop Inc (WING) \" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Wingstop-Inc-WING.png 1613w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Wingstop-Inc-WING-768x378.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Wingstop-Inc-WING-1536x755.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Wingstop-Inc-WING-1320x649.png 1320w\" sizes=\"auto, (max-width: 1613px) 100vw, 1613px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Wingstop Inc&#8217;s (WING) steady uptrend slowly tapered off, but still reached an all-time high.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>Speaking of a market that shows it sometimes knows nothing, FedEx Corporation (FDX) has cycled through wild swings in sentiment since October. FDX pulled off a sharp V-recovery from the October lows and rallied sharply into last week&#8217;s earnings. All that bullish expectation was cut off at the knees by a 12.1% post-earnings collapse the next day. I quickly faded FDX at 50DMA resistance (the red line). I rolled profits into a put calendar spread. Until FDX closes above its 50DMA again, the stock stays on my bearish watchlist.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1609\" height=\"792\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-FedEx-Corp-FDX.png\" alt=\"FedEx Corp (FDX) suddenly shot down below the 50DMA after poor post earnings results.\" class=\"wp-image-66975\" style=\"width:840px;height:auto\" title=\"FedEx Corp (FDX)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-FedEx-Corp-FDX.png 1609w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-FedEx-Corp-FDX-768x378.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-FedEx-Corp-FDX-1536x756.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-FedEx-Corp-FDX-1320x650.png 1320w\" sizes=\"auto, (max-width: 1609px) 100vw, 1609px\" \/><figcaption class=\"wp-element-caption\"><strong><em>FedEx Corp (FDX) suddenly shot down below the 50DMA after poor post earnings results.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>Home and building products company Griffon Corporation (GFF) hit new all-time highs last week. This stock is on my housing and construction watchlist, but I completely lost track of it. With <a href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/05\/all-time-highs-race-ahead-of-data-housing-market-review\/\">the housing market looking upbeat<\/a> I am angling to buy GFF on the next dip (likely to the 20DMA uptrend).<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1612\" height=\"796\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Griffon-Corporation-GFF.png\" alt=\"\" class=\"wp-image-66976\" style=\"width:840px;height:auto\" title=\"Griffon Corporation (GFF)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Griffon-Corporation-GFF.png 1612w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Griffon-Corporation-GFF-768x379.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Griffon-Corporation-GFF-1536x758.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Griffon-Corporation-GFF-1320x652.png 1320w\" sizes=\"auto, (max-width: 1612px) 100vw, 1612px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Griffon Corporation (GFF) continued a steady uptrend, now at its highest point since all the way back in 1972.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>I have long been a skeptic on the Buy Now Pay Later (BNPL) stocks like Affirm Holdings, Inc (AFRM). <a href=\"https:\/\/investors.affirm.com\/news-releases\/news-release-details\/affirm-expands-self-checkout-walmart-stores\">Last week&#8217;s deal with Walmart (WMT)<\/a> further solidifies AFRM as a player here to stay for a while. My skepticism got a glimmer of validation when sellers almost reversed the entire 15.5% gain on the WMT news. AFRM closed the week looking ready to resume its rally and thus put more nails in the coffin of my skepticism!<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1612\" height=\"797\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Affirm-Holdings-Inc-AFRM.png\" alt=\"Affirm Holdings Inc (AFRM) surged 15.5% on a Walmart deal and almost gave back all the gains the next day.\" class=\"wp-image-66977\" style=\"width:840px;height:auto\" title=\"Affirm Holdings Inc (AFRM)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Affirm-Holdings-Inc-AFRM.png 1612w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Affirm-Holdings-Inc-AFRM-768x380.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Affirm-Holdings-Inc-AFRM-1536x759.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Affirm-Holdings-Inc-AFRM-1320x653.png 1320w\" sizes=\"auto, (max-width: 1612px) 100vw, 1612px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Affirm Holdings Inc (AFRM) surged 15.5% on a Walmart deal and almost gave back all the gains the next day.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>Royal Caribbean Cruises Ltd (RCL) caught my attention on a list of new 52-week highs. I panned back and was shocked to see RCL is almost back to all-time highs! RCL barely skipped a beat on Wednesday&#8217;s pullback. The stock even seemed to get reenergized from the selling as it surged 5.2% the next day.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1608\" height=\"796\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Royal-Caribbean-Cruises-Ltd-RCL.png\" alt=\"Royal Caribbean Cruises Ltd (RCL) has continued a steady uptrend ever since earnings in late October. RCL is almost back to all-time highs.\" class=\"wp-image-66978\" style=\"width:840px;height:auto\" title=\"Royal Caribbean Cruises Ltd (RCL)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Royal-Caribbean-Cruises-Ltd-RCL.png 1608w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Royal-Caribbean-Cruises-Ltd-RCL-768x380.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Royal-Caribbean-Cruises-Ltd-RCL-1536x760.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-Royal-Caribbean-Cruises-Ltd-RCL-1320x653.png 1320w\" sizes=\"auto, (max-width: 1608px) 100vw, 1608px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Royal Caribbean Cruises Ltd (RCL) has continued a steady uptrend ever since earnings in late October. RCL is almost back to all-time highs.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><a href=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT50-MMFI.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1612\" height=\"794\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT50-MMFI.png\" alt=\"\" class=\"wp-image-66979\" style=\"width:840px;height:423px\" title=\"AT50 (MMFI)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT50-MMFI.png 1612w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT50-MMFI-768x378.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT50-MMFI-1536x757.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT50-MMFI-1320x650.png 1320w\" sizes=\"auto, (max-width: 1612px) 100vw, 1612px\" \/><\/a><figcaption class=\"wp-element-caption\"><strong><em>AT50 (MMFI) continued to rise, reaching its highest point since 2021.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><a href=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT200-MMTH.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1612\" height=\"794\" src=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT200-MMTH.png\" alt=\"\" class=\"wp-image-66980\" style=\"width:840px;height:auto\" title=\"AT200 (MMTH)\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT200-MMTH.png 1612w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT200-MMTH-768x378.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT200-MMTH-1536x757.png 1536w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2023\/12\/122223-AT200-MMTH-1320x650.png 1320w\" sizes=\"auto, (max-width: 1612px) 100vw, 1612px\" \/><\/a><figcaption class=\"wp-element-caption\"><strong><em>AT200 (MMTH) keeps climbing, reaching its highest point since 2021.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n<p>Be careful out there!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"footnotes\"><strong>Footnotes<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/drduru.com\/onetwentytwo\/subscribe-free\/\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe for free<\/a> to get email notifications of future posts!<\/p>\n\n\n\n<p>&#8220;Above the 50&#8221; (AT50) uses the percentage of stocks trading above their respective 50-day moving averages (DMAs) to measure breadth in the stock market. Breadth defines the distribution of participation in a rally or sell-off. As a result, AT50 identifies extremes in market sentiment that are likely to reverse. Above the 50 is my alternative name for &#8220;MMFI&#8221; which is a symbol TradingView.com and other chart vendors use for this breadth indicator. Learn more about AT50 on my <a href=\"https:\/\/drduru.com\/onetwentytwo\/about\/t2108-resource-page\/\">Market Breadth Resource Page<\/a>. AT200, or MMTH, measures the percentage of stocks trading above their respective 200DMAs.<\/p>\n\n\n\n<p><strong><strong><strong><strong>Active AT50 (MMFI) periods:<\/strong><\/strong> <\/strong><\/strong>Day #33 over 20%, Day #31 over 30%, Day #29 over 40%, Day #28 over 50%, Day #25 over 60%, Day #16 over 70% (16th day overbought)<\/p>\n\n\n\n<p>Source for charts unless otherwise noted: <a href=\"https:\/\/www.tradingview.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>TradingView.com<\/strong><\/a><\/p>\n\n\n\n<p><strong>Full disclosure:<\/strong>  long CAT put, long IWM call spread, long FDX calendar put spread<\/p>\n\n\n\n<p><strong>FOLLOW Dr. Duru&#8217;s commentary on financial markets via <a href=\"https:\/\/stocktwits.com\/DrDuru\" target=\"_blank\" rel=\"noreferrer noopener\">StockTwits<\/a>, <a href=\"https:\/\/twitter.com\/DrDuru\" target=\"_blank\" rel=\"noreferrer noopener\">Twitter<\/a>, and even <a href=\"https:\/\/www.instagram.com\/drduru_market_breadth\/\" target=\"_blank\" rel=\"noreferrer noopener\">Instagram<\/a>!<\/strong><\/p>\n\n\n\n<p>*Charting notes: Stock prices are not adjusted for dividends. Candlestick charts use hollow bodies: open candles indicate a close higher than the open, filled candles indicate an open higher than the close.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stock Market Commentary After the stock market rally suffered strike one and strike two, Wednesday&#8217;s sudden pullback had all the signatures of a third strike to start the end of the extended overbought rally. Sellers surged in the final 90 minutes of trading that day. However, they failed to sustain the stampede for the exits. &#8230; <a title=\"The Extended Overbought Rally Quickly Overcomes Its Third Strike &#8211; The Market Breadth\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/23\/extended-overbought-rally-quickly-overcomes-third-strike-the-market-breadth\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":66998,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[368,548,219,43,1312,490,338,1311,62,518,1633,920],"tags":[2959,2960,1820,2832,3263,3264,64,63,2201,1785,3327,3389,3391,2218,909,413,2054,3390,65,362,2130,3320],"class_list":["post-66982","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-automotive","category-financials","category-high-tech","category-industrial-sector","category-manufacturing-2","category-overbought","category-retail","category-software","category-technical-analysis","category-transportation","category-travel","category-uptrend","tag-affirm-holdings-inc","tag-afrm","tag-at200","tag-at50","tag-carg","tag-cargurus-inc","tag-cat","tag-caterpillar-inc","tag-compq","tag-fdx","tag-fedex-corporation","tag-gff","tag-griffon-corporation","tag-ishares-russell-2000-etf","tag-iwm","tag-nasdaq","tag-rcl","tag-royal-caribbean-cruises-ltd","tag-sp-500","tag-spy","tag-wing","tag-wingstop-inc"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Extended Overbought Rally Quickly Overcomes Its Third Strike \u2013 The Market Breadth<\/title>\n<meta name=\"description\" content=\"After the stock market suffered strikes one and two, a sudden pullback looked like a third strike to end the extended overbought rally.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2023\/12\/23\/extended-overbought-rally-quickly-overcomes-third-strike-the-market-breadth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Extended Overbought Rally Quickly Overcomes Its Third Strike - The Market Breadth\" \/>\n<meta property=\"og:description\" content=\"After the stock market suffered 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