What Is The Market Breadth Telling Us?

What Is The Market Breadth Telling Us?

Equity traders are in the risk-off mode as a number of factors are influencing their decision. Firstly, the fast spread of the Delta strain is stoking concerns among them, and how this is going to influence the economic growth. Secondly, the Fed Minutes, released earlier this week, has made traders concerned now that the Fed may be rushing to taper the loose monetary policy as economic conditions are deteriorating. They believe that economic data doesn’t have the same kind of strength currently that it had earlier this year. In addition to this, the ongoing regulatory crackdown by the Chinese authorities on big tech is further denting the sentiment. Beijing has passed new rules for tech companies in relation to handling their data. 

Asian Markets

The Asian stock market traded mostly lower on Friday. The Nikkei index decreased by 0.89%. The HSI index decreased by 2.25%, while the ASX index declined by 0.05% of its value. The Shanghai index dropped by 1.68%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth continued to lose more momentum yesterday. 70% of the Dow Jones stocks traded above their 200-day moving average. The S&P 500 stock breadth also experienced further weakness in momentum. 74% 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, we do not have much on the US economic docket however; investors will be looking at the Canadian Core Retails Sales which is due later in the day today. The forecast for the Canadian Retail Sales m/m is 0.2%, while the previous reading was at 0.5%.

The Dow Jones industrial futures have fallen for three consecutive days, and it seems like the sell off still has further to go. The Dow has crossed below the 50-day SMA on the daily time frame which is a sign that the bulls have lost full control of the price. The Dow fell to the 100-day SMA today and quickly bounced off this level and this is confirming that the 100-day SMA is acting as a line of support and there are some large buying orders which are supporting the price at this level. Overall, bulls are still holding on to their hopes as the Dow price is still trading above the 200-day SMA. As long this remains in place, there are chances that the upward trend may continue.

As for the RSI, it continues to move away closer to oversold zone, currently near the 45 mark. If the RSI drops to 30 or below 30, that will indicate that prices are oversold, and we may see a bounce in the Dow’s price. The near term support is at 32.874, while the resistance is at 35,633.

Stock Market Rally

The S&P 500 stock index closed higher yesterday; the index increased by 0.13%. The information technology sector led the index higher and 6 out of 11 sectors closed higher. The Dow index declined yesterday; the Dow stocks moved the index lower by 0.19%. 13 shares advanced, while 17 shares closed lower. The NASDAQ composite, a tech-savvy index, closed higher by 0.11% yesterday.

S&P 500 Leaders and Laggards: Bath and Body and Illumina

Bath and Body contributed the biggest gain, soaring 10.92%. Illumina stock was the largest drag; it fell by 6.505%. The S&P 500 stock index is up 18% so far this year.

Dow Jones Leaders and Laggards: United Health and Boeing

United Health provides the biggest help for the Dow Jones; it advanced by 2.53%, while Boeing was the largest decliner, it fell by 3.12%.