A Stock Market Of Parallel Exhaustion And Breakouts

AT40 = 52.9% of stocks are trading above their respective 40-day moving averages (DMAs) (4-month high)
AT200 = 22.4% of stocks are trading above their respective 200DMAs (4-week high)
VIX = 18.2 (5-week low)
Short-term Trading Call: cautiously bullish

Commentary

The major indices are still showing signs of exhaustion, but the sellers have yet to wrest back control of the stock market. I am still finding a good number of individual stocks that are breaking above critical resistance levels and doing enough to keep boosting AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs). AT40 closed the week at a 4-month high. AT200 (T2107), the percentage of stocks trading above their respective 200DMAs, continues to demonstrate the depth of the market’s technical damage by only nudging higher to 22.4%, a 4-week high.

On Friday, the S&P 500 (SPY) dipped ever so slightly and recovered to flatline. The intraday ranges on the index are tightening, perhaps in anticipation of the next major (explosive) catalyst.

The S&P 500 (SPY) has slowed its ascent. FOr the third straight day, the index jammed against the lower boundary of its upper Bollinger Band channel.

The S&P 500 (SPY) has slowed its ascent. FOr the third straight day, the index jammed against the lower boundary of its upper Bollinger Band channel.

The NASDAQ and the Invesco QQQ Trust (QQQ) are also still exhibiting signs of exhaustion as their intraday ranges contract under critical resistance.

Netflix (NFLX) bullishly broke out above its 200DMA with a 4.0% gain.

Netflix (NFLX) bullishly broke out above its 200DMA with a 4.0% gain.

For three straight days, the Invesco QQQ Trust (QQQ) has found resistance at the lower boundary of its upper Bollinger Band channel.ac

For three straight days, the Invesco QQQ Trust (QQQ) has found resistance at the lower boundary of its upper Bollinger Band channel.ac

The iShares Russell 2000 ETF (IWM) is showing a bit more life than the other major indices, but it too is showing clear hesitance just below 50DMA resistance.

The iShares Russell 2000 ETF (IWM) is making grudging progress toward a test of 50DMA resistance.

The iShares Russell 2000 ETF (IWM) is making grudging progress toward a test of 50DMA resistance.

The increasing calm has taken its toll on the volatility index, the VIX. Still, I decided to use this drop as an opportunity to add another long volatility bet.

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Disclosure: Long SSO, long KBH calls, long NLSN calls, long PLCE calendar call spread

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