Every so often, we take a look at cumulative breadth and volume, when they appear to have something to “say.” This could be one of those times, as cumulative volume has already made a new all-time high (in “stocks only” terms) as has cumulative breadth.
First, some definitions and nomenclature:
Cumulative breadth (CB): the running daily total of advances minus declines.
The stock market has remained in a fairly tight range ever since breaking out over resistance at 3185 in mid-July. This has had the effect of reducing realized volatility (more about that later), as well as frustrating both bulls and bears. There is overheard resistance at 3280 (the July highs) and there is support at 3185 and below that, at 3155.
Join Larry McMillan as he discusses the current state of the stock market on Monday, July 27th, 2020.
Stocks have managed to overcome each resistance level with some effort but have not been able to accelerate to the upside. $SPX has encountered resistance at 3155, 3185, 3235, and now 3280 (or just below). Hence the advance has been -- choose your favorite adjective -- labored, halting, tired, or merely stairstep. Whichever one you choose, none have resulted in a strong breakout. But the $SPX chart will remain bullish until support in the 3100-3130 area is broken.
Join Larry McMillan as he discusses the current state of the stock market on Monday, July 20th, 2020.
Join Larry McMillan as he discusses the current state of the stock market on Monday, July 13th, 2020.
This week, $SPX overcame the previous resistance at 3155 and appeared ready to take off. But then it faltered again, at roughly the 3185 level. Hence it is still in a trading that extends from 2920 to 3230. A decisive breakout of that range in one direction or the other will likely signal the next large directional move.
Join Larry McMillan as he discusses the current state of the stock market on Monday, July 6th, 2020.
The S&P 500 Index ($SPX) has been bouncing back and forth in a trading range for several weeks now. So, for now, $SPX is trading between 2965 and 3155. A wider trading range could probably be justified as well: 2920 on the downside and 3184 on the upside. 2920 was the top of the April-May trading range, and 3184 would close the gap on the island reversal. Either would be significant for a potential breakout, but until that occurs, we can expect continued volatile price action within the current range.
