What Is The Stock Market Breadth Telling Us?

What Is The Stock Market Breadth Telling Us?

Chinese tech stocks were sold off once again due to the regulatory fear. This theme has been dominant for the past the few days over in Asia, and today, we saw this becoming more prominent in Asia.  Companies like Tencent, Alibaba and Meituan saw their share prices plunge further by 2.93%, 2.72% and 5.49% respectively today.

Basically, Beijing is serious this time in having a more firm oversight in Chinese listing in the US, and many of these companies belong to the tech sector. Ride Hailing giant, Didi, was the frontrunner in this story, and now, other tech firms are facing the same fear. The concern is that they are more likely to be targeted by the Chinese authorities.

As for the oil prices, both Brent and Crude prices continues to sell-off as investors have started to price in that OPEC+ may eventually begin to increase the oil supply, and this anxiety triggered a sell-off. Having said that, oil prices did experience a massive bull run during the past few weeks and a retracement was well due.

Asian Markets 

The Asian stock market traded mostly lower on Thursday. The Nikkei index declined 0.68%. The HSI index decreased by 2.00%, while the Shanghai index fell by 0.57%. The ASX index gained 0.09%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth gained further momentum yesterday. 88% of the Dow Jones stocks traded above their 200-day moving average. 

The S&P 500 stock breadth also confirmed more strength in momentum yesterday. 90% 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 weekly Initial Jobless Claims data which is due later. The forecast for this number is to rise by 350K while the previous number came in at 364K. In addition to this, we also have the crude oil inventory data due and the forecast is for -4.0M, against the previous number of -6.7 million. 

The Dow Jones is still trading close enough to its all-time high but there is no doubt that the Dow Jones is the weakest index when compared with the S&P 500 and the Nasdaq 100. Both of these two indices have recorded new all-time highs this week, whereas the Dow Jones stock futures have started to flirt with the 50-day SMA on the daily time frame.

Overall, the bulls are still in control of the price as the Dow Jones’ price is still trading above the 100-day SMA and the 200-day SMA on the daily time frame. As long as the price continues to trade above these averages, bulls may not have much to worry about. As for the RSI, the relative strength index, it is still trading away from its overbought zone and this means that the Dow Jones price could move higher if the bullish momentum comes back in play.

The near term support is at 33,884, while the resistance is at 35,015.    

Stock Market Rally

The S&P 500 stock index closed higher yesterday; the index increased by 0.34%. The tech sector led the index higher and 8 out of 11 sectors closed higher. 

The Dow index also closed higher yesterday; the Dow stocks moved the index higher by 0.30%. 10 shares advanced, while 20 shares closed lower. 

The NASDAQ composite, a tech-heavy index, closed higher yesterday and gained 0.01% yesterday.

S&P 500 Leaders and Laggards: Oracle and Xilinx

Oracle stock contributed the biggest gain, soaring 3.62%. Xilinx Inc stock was the largest drag; it fell by 4.66%. The S&P 500 stock index is up 8.74% so far this year.

Dow Jones Leaders and Laggards: Apple and Boeing 

Apple provided the biggest help for the Dow Jones; it advanced by 1.79%, while Boeing was the largest decliner, it fell by 1.84%.