At the beginning of last week, there was a lot of anxiety among investors and traders. This is in line with the sharp drop in the bullish% figure of the American Private Investors Association last week. On September 8th, 38.9% of individual investors were bullish, but the following week only 22.4% were bullish. During this period, the bearish% rose from 27.2% to 39.3%.
Given the technical assessment of the stock market two weeks ago, I was surprised that investors and traders weren’t too worried about the stock market. As recently, dip buyers moved quickly and started buying before the store closed on Monday. After that, stock prices rose for the rest of the week. By the AAII survey last Thursday, the bullish% had increased from 22.4% to 29.9%, but the bearish% had remained virtually unchanged.
While some have downplayed the impact on the US market, the debt crisis surrounding China’s conglomerate Evergrande is seen as the main driver of Monday’s decline. Investors were also nervous about the weakening economic recovery and concerns about the sustained spread of COVID-19.
This week’s Dow Jones Industrial Average and iShares Russell 2000 rose 0.6%, slightly above the S & P 500 and the Dow Jones Industrial Average’s 0.5% rise. The Dow Jones Industrial Average fell 1.2% and SPDR Gold Shares fell 0.3%, making it a tough week.
So did the rebound from Monday’s lows and the weekly recovery indicate that the market corrections are over? The daily market interior was positive early in the rebound, but during the NYSE week, 1721 problems progressed and 1762 problems decreased.
Spider Trust (SPY)
In early June, a strong bullish signal came to the market from the up / down line. Market challenges in the last few months have been illustrated by the difference in forward / downward lines for S & P 500 and NYSE stocks only. The S & P 500 A / D line hit new highs in July, August and early September, but fell below support (line b) on September 17. The A / D line has returned to a flat EMA, but below the previous line. Uptrend and resistance.
In contrast, the NYSE Stocks Only Advance / Decline line hit a high on June 8th and has formed a series of lows since then (line c). This indicates that the majority of common stock did not tend to be as positive as the S & P 500 or Nasdaq 100.
Invesco QQQ Trust (QQQ)
The Nasdaq-100 Advance / Declainline hit a series of highs in 2021 and the last high on September 3. The A / D line fell below the weighted moving average on 9 September and has been declining since then. Friday ended just below the previous peak. A strong move above this high will be bullish for QQQ, which has the next best support on lines c and d.
The results of my regular weekly stock scans confirm my view of the split market. While there are many stocks that charts and technical studies prefer to buy, some stocks look attractive because of their weaknesses.
I believe that all successful investors and traders need to understand and trade stock market modifications. I’ve looked at market declines and corrections dating back to the 1960s, and although they aren’t exactly the same, they have similarities. Stock market risk has fallen due to the fall last week, but the disruption of market behavior indicates that the market is not yet ready for a wide range of new market uptrends such as those that began in November 2020. ..
We expect the bullish cases to become stronger in the next two to four weeks. But until then, we only recommend highly selective purchases that are well-supported and allow you to manage your risk appropriately.