• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Is this a Dead-Cat Bounce or a Bounce with Legs?
Stock

Is this a Dead-Cat Bounce or a Bounce with Legs?

by May 3, 2024
by May 3, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Stocks fell sharply into late April and then rebounded over the last two weeks. SPY fell 5.34% from March 28th to April 19th and then rebounded with a 3.26% gain the last two weeks. Does this bounce have legs? Chartists can separate serious bounces from dead-cat bounces using breadth. Today’s example will use the S&P 500 and the percentage of S&P 500 stocks their 20 day SMAs.  

There are two steps. First, the indicator needs to become oversold (setup). Second, we need to see a significant increase (breakout) in upside participation (signal). An oversold reading signals a significant decline and provides the setup for a bounce. Aggressive traders can trade the oversold condition. A subsequent move above the breakout level signals adequate participation to sustain the advance. Now comes the subjective part. We must choose our oversold and breakout levels. I am choosing 10 and 70 percent for SPX %Above 20-day SMA.

The green shading on the chart above shows when SPX %Above 20-day became oversold and the green arrow-lines mark the subsequent move above 70%. There were setup-signals in March-April and again in October-November. Both led to significant bounces. Notice the red shading where the indicator failed to clear 70% in mid October. This was a feeble bounce and SPY moved to a new low in late October. SPX %Above 20-day then surged above 70% in early November for a signal.  Recently, the indicator became oversold here in mid April for a setup and moved back above 50% this week. An oversold bounce is indeed underway, but I need to see a move above 70% to show a participation breakout.

We are monitoring the rebound in the S&P 500 and Nasdaq 100 at TrendInvestorPro (ChartTrader). Our 10 indicator composite indicator became oversold in mid April, but we have yet to see the required breadth thrust to signal a strong increase in participation. ChartTrader reports and videos provide broad market timing signals and trading setups for leading stocks and ETFs. This week we featured setups in the T-Bond ETF (TLT), the Biotech SPDR (XBI) and four Tech ETFs (IGV, SOXX, CIBR, SKYY). Click here for immediate access.

//////////////////////////////////////////////////

You Might Also Like
  • Empowering Your Trading Journey: Handpicked Trading Books Every Trader Should Read
  • Small-Caps Rocket to the Upside, Leave Large-Caps in the Dust
  • An Enticing Gold Mining Stock with a Strong SCTR Score
  • From Selloff to Surge: Growth Stocks Rebound After CPI
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Key Breadth Indicator Flashes Buy Signal for Nasdaq 100
next post
Technology Stocks Back In the Lead: Are Inflation Fears Behind Us?

You may also like

Powerful Entry Strategy Using One Moving Average

May 15, 2024

Hot Gold Drops & Shaky Semis Pop

May 8, 2023

Sector Spotlight: Money Rotating Out of Large-Cap Growth Stocks

August 14, 2023

Sector Spotlight: Dominant Trend for Stocks Still UP

February 20, 2024

BONDS & CASH – But Can We Find Better Income...

September 8, 2023

The Halftime Show: Crude Oil Back in the “White House...

December 14, 2023

RRG Showing Strong Rotation For Stocks in All Time Frames

January 15, 2024

Will Bitcoin Go the Way of a Commodity or an...

October 14, 2023

What Happens to GOOGL When This Negative Divergence Executes

May 28, 2024

Here’s My Long-Term Perspective on U.S. Stocks

May 6, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Pinpoint Strong Sectors BEFORE The Masses...

    September 11, 2024

    New SPX Correction Signal! How Long...

    March 19, 2025

    Jobs Soar Past Estimates, But What...

    October 4, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here