Apple Leads A Picture Perfect Bear Market Bounce - The Market Breadth

In the middle of last week, the S&P 500 was poised to hit bear market territory. Conditions were ripe with the stock market trading in deeply oversold territory and other indices toiling deeply in bear markets; a sharp rebound could happen at any time for any excuse. Both the S&P 500 and Apple Inc (AAPL) provided the excuse. Apple led the way for the bear market bounce. AAPL printed a picture-perfect rebound after tapping its October, 2021 low. AAPL lowered its loss for the day with a 2.7% drop. Friday’s 3.2% gain still left AAPL with a whopping 6.5% loss for the week. With AAPL leading the way, the S&P 500 stopped just short of its bear market line. That line represents a 20% loss from the index’s all-time high set in January. Traders and algorithms must have rounded up and declared “close enough.” Buyers took the wheel from there.

Technicals are shining in this period of high volatility. The market seemed relieved when Federal Reserve Chair Jerome Powell appeared to take a 75 basis points rate hike off the table: “So 75 basis point increase is not something the committee is actively considering” (from the transcript of the press conference). The S&P 500 soared 3.0% that day but collapsed the very next day by 3.6%. Fast forward to an interview with Marketplace, Powell clarified that the Fed will respond flexibly to the data (as always). NOTHING is off the table: “…if [things] come in worse than what we expect, we are prepared to do more” (the 6:30 market in the audio). That revelation did not stand in the way of the picture-perfect bear market bounce.

In other words, the episodic news hardly matters here given the more important looming interplay between high inflation and tightening monetary policy. On the technical side, I continue to watch important levels of support and resistance and, most importantly, oversold trading conditions.

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Видео Apple Leads A Picture Perfect Bear Market Bounce - The Market Breadth канала Ahan Analytics, LLC