Trends, Breadth & Market Theories — Q&A

More stocks rise each day (bullish breadth), but declining stocks are increasing → market may be shifting bearish. This is an overbought market — prices still rising but less strongly; bearish indicator.

Bullish — prices are decreasing but declining stocks are decreasing in number; market starting to trend upward. Overbought = rising now, bearish signal; oversold = falling now, bullish signal.

Resistance = $50 (price won’t go above); Support = $40 (price won’t go below). Price range-bound = consolidation — neutral/uncertain; suitable for flat strategies like covered calls.

Upside (above resistance) = bullish — demand may surge (self-fulfilling). Downside (below support) = bearish — selling pressure increases supply. Breakouts often continue in the same direction.

Average closing price over the past 100 days, smoothing daily noise. Each day: today’s close is added, the close from 101 days ago drops out.

Round lot = 100 shares (standard unit). Odd lot = less than 100. Theory: odd-lot traders are often wrong → chartists do the opposite. Heavy odd-lot sales = bullish signal (chartist considers buying).

Bullish — counterintuitive. High short interest means much selling already priced in; when shorts cover (buy back), demand rises and can push price up. Higher short interest → more bullish; lower → more bearish.

How much trading occurs in a stock or market (e.g., SNAP avg ~50M shares/day). A dramatic spike (e.g., 150M) is a notable data point — meaning varies but signals unusual activity.