We have now experienced seven consecutive days with more S&P 500 stocks declining than advancing. Are we finally going to see an expansion in the new lows list?
The short answer is yes…
We are beginning to see the 1-month new lows list expanding.
But should we be concerned?
Here's the data:
(right-click and open image in new tab to zoom in)
The Takeaway: The key point is that you cannot have a bear market of any kind without the prices of stocks falling.
However, the recent spike in the one-month new lows does not raise any significant red flags at this time, as it is no different from similar pullbacks over the past 2 years and not what a significant market top environment would look like.
Until I observe a more serious deterioration in market internals with the list of new lows expanding into longer timeframes, I have no reason to believe we are entering a bear market.
However, a short-term pullback at this point wouldn’t be surprising at all.
On average, each year tends to have 3 to 4 pullbacks of 5% or more, and in 2024, we have only seen two pullbacks of this size.
