We have now experienced 8 consecutive days with more S&P 500 stocks declining than advancing.
But, this time it is different…
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 in the middle represents the consecutive days the S&P 500 had more decliners than advancers.
The red line at the bottom represents the percentage of S&P 500 stocks at 1-month lows.
The Takeaway: Yes, breadth appears weak at first glance, as the data indicates that more stocks have been declining than advancing over the past 8 trading days.
Looking back at history, we can see that this period of poor breadth has occurred three other times over the past two decades.
All three times were amid bear markets and record-high spikes in one-month new lows.
Currently, we are just 0.6% below all-time highs, and one-month new lows are subdued.
This suggests that the market environment is different this time and more focused on a rotation back into stocks that have recently underperformed, particularly techy mega-cap growth names.
As I mentioned earlier this week, we don't need to be overly worried about a market correction just yet; for me to plant a red flag down, I would need to see a more significant spike in short-term new lows.
It's always important to be aware of the ever-changing data.
