November 12, 2020

Stock Market Breadth Losses Its Momentum

Stock Market Breadth Losses Its Momentum

Traders have growing concerns about the surge in the coronavirus cases in the U.S. This has shifted the focus among investors towards the work from home stocks, and this means airlines, hospitality and tourism have started to slump once again. There is no doubt that there is optimism about the upcoming coronavirus vaccine, but in the short term, the resurgence of coronavirus cases in the U.S. is troublesome.

The Asian stock market moved mostly lower today as investors booked profits. The ASX 200 index closed with a loss of 0.49%. The Korean Kospi index declined 0.49%, while the Nikkei index surged 1.68%. The Shanghai index declined by 0.11%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth lost some momentum yesterday. 83% of the Dow Jones stocks traded above their 200-day moving average. This is a change of 44% from a day earlier.  

The S&P 500 stock breadth also confirmed weakness. 82% of the shares traded above their 200-day moving average. This is a change of -1% from a day earlier.  

Dow Jones Futures Today

The Dow Jones futures are trading lower by 169 points today. In terms of economic data, investors will be looking at the initial and continuing claims data. The forecast for the continuing claims data is 6,900K, while the previous reading was at 7,285K.

The Dow Jones futures have recorded nine consecutive days of gains. Bulls are still very much in control of the price action and the reason for this is that the Dow Jones is still trading above the 50, 100 and 200-day SMA on the daily time frame. However, there are stronger chances that the Dow may face some retracement as the RSI, the relative strength index, is approaching near overbought zone. The near term resistance is at 29,993, and the support is at 26,219.

The S&P 500 futures, which represent the broader stock market, are losing their sense of direction as the price is still trading well below the highs of Monday. Having said that, the price is still trading above the all-important moving averages such as the 50, 100 and 200-day. The resistance is at an all-time high, 3,667 and the support is at 3,429. 

Stock Market Rally

The S&P 500 stock index closed higher yesterday; the index advance by 0.77%. The information technology sector led the index higher- six out of 11 sectors closed higher. 

The Dow index lost its mojo yesterday; the Dow stocks moved the index lower by 0.08%. 19 shares of the Dow fell, and 11 closed higher. 

The NASDAQ composite, a tech-savvy index, closed with a gain of 2.31%. 

S&P 500 Leaders and Laggards: Etsy and Air Prod

Etsy stock contributed the biggest gain, soaring 9.34%. Air Prod & Chem stock was the largest drag; it fell by 9.4%. The S&P 500 stock index is up 11% so far this year.

Dow Jones Leaders and Laggards: Boeing and Salesforce

Salesforce advanced higher by 2.63% and was the biggest mover for the Dow, while Boeing stock declined 3.47%, the biggest drag for the Dow Jones Industrial Average index.