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Stock Market Breadth Maintains Its Momentum

Stock Market Breadth Maintains Its Momentum

Joe Biden’s administration had its first contact with China, and they made it pretty much clear that the US policies aren’t going to shift massively. However, the fact is that traders already knew that Biden is also going to pursue tougher policies against China, but the way of tackling problems will be largely different, which is going to make all the difference. 

Asian Markets 

The Asian stock market traded mostly lower on the final trading day of the week. The Shanghai index declined 0.65%. The HSI index decreased by 1.45%, while the ASX index fell 0.34%. The Nikkei index dropped by 0.25%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth maintained its yesterday. 97% of the Dow Jones stocks traded above their 200-day moving average. 

The S&P 500 stock breadth gained further momentum as the index rallied yesterday. 89% of the shares traded above their 200-day moving average. 

Dow Jones Futures Today

The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the Flash Services PMI and Existing Home Sales numbers. In addition to this, we also have the Crude oil inventories today. The forecast for Flash Services PMI is 53.3%, for Existing Home Sales, it is 6.55M, and crude oil inventories is -1.2M.  

The Dow Jones futures are trading lower today, and the Dow Jones futures have moved away from their all-time high. It seems like that the bulls are trying to find it difficult to break above the resistance of 31175. If the price fails to push above this resistance, the path of least resistance will be to the downside. This means that the Dow Jones could be heading towards the 50-day SMA on the daily time frame. But for now, one thing is pretty clear that the bulls are in control of the price as the price is trading above the 50, 100 and 20-day SMA on the daily time frame. 

The S&P 500 futures, which represent the broader stock market, are also trading lower today. The Relative Strength Index shows that the S&P 500 is overbought as the RSI is trading near the 70 mark. A level of 70 is associated with overbought, and this means that the price is likely to face a sell-off, and a level of 30 usually means the asset is over oversold—meaning an upward move is more likely. Just like the Dow Jones, the S&P 500 is also trading above the 50, 100, and 200-day SMA, which confirm that bulls are in control of the price.

The near term support is at 3724, while the resistance is at 3850.    

Stock Market Rally

The S&P 500 stock index closed higher yesterday; the index advanced by 0. 03%. The technology sector led the index higher – 3 out of 11 sectors closed higher. 

The Dow index failed to secure any gains yesterday; the Dow stocks moved the index lower by 0.04%. 10 shares advanced while 20 shares closed lower. 

The NASDAQ composite, a tech-savvy index, closed higher by 0.55% yesterday.

S&P 500 Leaders and Laggards: Paccar and EOG Resources

Paccar stock contributed the biggest gain, soaring 10.5%. EOG Resources stock was the largest drag; it fell by 8.59%. The S&P 500 stock index is up 2.6% so far this year.

Dow Jones Leaders and Laggards: Apple and Boeing 

Apple provided the biggest help for the Dow Jones; it advanced by 1.63%, while Boeing was the largest decliner, it fell by 1.91%. 

Bitcoin 

The crypto king is under selling pressure, and during its recent rally, it failed to break above the all-time high. However, traders need to keep one thing in mind, and that is that Bitcoin was long due for a correction. Any asset needs to have a healthy correction as it cannot continue to move higher forever. Once again, the current correction is a blessing for those who have missed the rally during which the cryptocurrency doubled from its previous high, a move from 20K to 40K. You know that whenever that cycle comes, and I am not saying that the current bullish cycle is over, the Bitcoin price can easily double in value. So even if the current bull cycle is, and from here onwards, we continue to see a gradual decline or an extended period of consolidation, the next rally could easily push the price towards the 80K price. 

The fact that bitcoin violated the 30K price level will get attention from a lot of traders. Anything below 30K is likely to attract new buyers, and if the price drops below 25K, it will attract bargain hunters. And if, this is a big if, the bitcoin price continues to correct itself and moves toward 20K, that could be an opportunity of a lifetime.