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This Is What The US Stock Market Breadth Telling Us


16 July 2021

The US banking sector pretty much drove the price action for the US indices this week while the technology sector drifted mostly lower. Investors believe that the US stock market can continue to challenge its all time highs as long as the stimulus program remains in place. Jerome Powell, the Fed Chairman, has made it clear this week that the Fed is no rush to taper the current program and this has only strengthened the current view that investors hold about the US stock market.

In the energy market, expectations of extra supply hitting the market next month has made investors to take some chips of the table. Having said that, it is likely that we may continue to see higher Crude and Brent oil prices in the next few weeks as extra supply is likely to be absorbed by strong economic recovery in the US and around the globe.

Asian Markets 

The Asian stock market traded mostly lower on Friday. The Nikkei index declined 0.81%. The HSI index increased by 0.47%, while the Shanghai index fell by 0.02%. The ASX index declined by 0.01%.

The Dow Jones’ market breadth gained further momentum yesterday. 87% of the Dow Jones stocks traded above their 200-day moving average. 

The S&P 500 stock breadth weakened yesterday. 86% of the shares traded above their 200-day moving average. 

Dow Jones Futures Today

The Dow Jones futures are trading higher today. In terms of economic data, investors will be looking at the US Core Retail Sales number which is due later. The forecast for this number is to rise by 0.4% while the previous number came in at -0.7%. In addition to this, we also have the US Prelim Consumer Confidence and the forecast is for 86.5 which is same as the previous reading. 

The Dow Jones continues to trade near its all time high on the daily time frame. The Dow is maintaining its upward trend and traders have taken every selloff as an opportunity to bag bargains. However, traders may want to be cautious with their approach as the price could be forming a double top, a reversal pattern, as the price revisits its all time high.

Overall, bulls are fully in control of the price for now as the price continues to trade above the 50, 100 and 200-day SMA on the daily time frame. The near term support is at 34,319, while the resistance is at 35,015.    

Stock Market Rally

The S&P 500 stock index closed lower yesterday; the index increased by 0.33%. The tech sector led the index higher and 8 out of 11 sectors closed higher.  The Dow index closed higher yesterday; the Dow stocks moved the index higher by 0.15%. 12 shares advanced, while 18 shares closed lower. 

The NASDAQ composite, a tech-savvy index, closed lower by 0.70% yesterday.

S&P 500 Leaders and Laggards: AIG

AIG stock contributed the biggest gain, soaring 3.02%. Teleflex stock was the largest drag; it fell by 9.62%. The S&P 500 stock index is up 8.12% so far this year. Dow Jones Leaders and Laggards: Honeywell International and Salesforce.com

Honeywell International  provided the biggest help for the Dow Jones; it advanced by 2.19%, while Salesforce.com was the largest decliner, it fell by 2.11%. 

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