We have now experienced 6 consecutive days with more S&P 500 stocks declining than advancing. This matches the previous streak of negative breadth observed over the past seven years.
Should we be concerned about this?
Here’s the chart:
(right-click and open image in new tab to zoom in)
Let's break down what the chart shows:
The blue line in the top panel shows the price of the S&P 500 index.
The black line at the bottom represents the consecutive days the S&P 500 had more decliners than advancers.
The Takeaway: When we dig into the data, we can see that during the past 6 trading days, several large stocks increased in size while many smaller stocks decreased. This shift in market participation doesn't mean the market is now going to fall.
It suggests a rotation back into stocks that have recently underperformed, particularly large-cap growth companies.
The top 10 stocks by market cap have an average return of 4.9% since last Monday, while the rest of the S&P 500 has an average return of -1.8%.
This tells me that the starters are now back on the court!
So, we don't need to be overly worried about a market correction just yet, but it is important to stay aware of the data.
Is this large-cap leadership going to be the theme for 2025?
