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Breadth

Oct 05 2018

Odds Of Outperforming?

  • Oct 5, 2018

In September, the percentage of S&P 500 stocks outperforming the S&P 500 index fell to 40.7%, the lowest reading since mid-2012. Breadth has followed a conventional path over the course of this unconventional bull market; in the current phase, the odds of outperformance are steadily diminishing.

Oct 05 2018

Investor Temperament And The “Tape”

  • Oct 5, 2018

In the first week of October, the share of newsletter bulls topped 61% just as the NYSE percentage slid to 41%. Maybe it’s a seasonal thing… the last time that happened was October 2007.

Sep 08 2018

Technical Difficulties

  • Sep 8, 2018

Traditional breadth measures have yet to show end-of-cycle thinning of the ranks, but some secondary measures suggest that process may be underway.

Aug 07 2018

A Market Breadth Mystery

  • Aug 7, 2018

It’s difficult to knock a stock market in which Small Caps and major breadth measures are making frequent new highs, however, there are performance anomalies that suggest liquidity is no longer sufficient to “float all boats.” Recent underperformance of the Equal Weighted S&P 500 is a case in point, at the same time, the current dichotomy in market breadth pales in comparison to the 1999-2000 episode.

Jul 07 2018

The Bulls And Bears Agree!

  • Jul 7, 2018

Yes, bulls and bears now hold their respective positions for the same reason—i.e., the U.S. economy is exceptionally strong. The stock market is accommodating this rare bipartisanship with sufficient reason to support either position.

Jun 07 2018

Is Market Breadth Misleading?

  • Jun 7, 2018

The stock market has narrowed, but not in the way we envisioned—nor in a way that’s consistent with most historical bull market tops. Small Caps and market breadth measures are traditionally the first to wilt when monetary tightening begins to hit the stock market. Instead, they are the leaders.

May 25 2018

Breadth Is Great— Except Where It Matters The Most

  • May 25, 2018

Last week’s piece challenged the now popular view that new highs for the Russell 2000 are a decisively bullish factor for the stock market in the near term. To our surprise, we found that market returns during periods of well-defined Small Cap leadership are significantly lower than when Smalls are laggards.

 

Apr 06 2018

A Troublesome Commodity Pattern...

  • Apr 6, 2018

During each of the last five months, the U.S. economy has shown a broadening array of “late-cycle” characteristics.

Apr 06 2018

Assessing The Selling

  • Apr 6, 2018

While the January 26th bull market high illustrated none of the hallmarks of a major cyclical top, there are secondary signs that a stealthy distribution process may be underway, such as an overwhelming bias toward opening market strength followed by intraday weakness.

Feb 07 2018

Most Likely Just A Correction

  • Feb 7, 2018

So, what happened to the January Barometer—the old analyst’s maxim that a market gain in January portends a gain for the full year?

Dec 07 2017

Seasonality And Market Breadth

  • Dec 7, 2017

While the FANGs—and, lately, the Dow stocks—are the market’s undisputed leaders, it’s difficult to argue the market has narrowed in a fashion that’s indicative of a “distribution” phase.

Nov 07 2017

Stock Market Observations

  • Nov 7, 2017

We remain bullish on stocks but with very limited visibility into 2018.

Sep 08 2017

Market Breadth Has Yet To “Lie” Down

  • Sep 8, 2017

We shouldn’t bite the hand that feeds us, but it’s easy to lie with charts.

May 26 2017

Bonds, Breadth, And Leadership: A Simple Model

  • May 26, 2017

Hard-core statisticians might be disappointed to learn that the 140-ish inputs in our Major Trend Index (MTI)aren’t entirely “independent and uncorrelated.”

Apr 07 2017

Stock Market Observations

  • Apr 7, 2017

Second-half results showed the U.S. emerging from the 2015-2016 profit recession, and our early read is that the first quarter should show more of the same.

Dec 07 2016

Stock Market Observations

  • Dec 7, 2016

We revisit our “Red Flag Indicator” of prior bull market tops versus today. Usually most of these internal market measures will deteriorate in advance of the final bull market peak. At the latest S&P high, three of the seven leading measures had raised Red Flags, by not confirming, but two of them (DJ Transports and the NYSE A/D Line), are within just ticks of new bull market highs.

Oct 07 2016

Charts: Beware Of Myopia

  • Oct 7, 2016

Despite a two-month stall in the blue chips, the breadth and momentum behind the market’s rally off mid-February lows remain hard to deny.

Aug 05 2016

Stock Market Breadth: So Good We’re Suspicious

  • Aug 5, 2016

Market breadth measures have been so strong since the February low that we wonder whether something might be wrong with them.

Jun 07 2016

Stock Market Observations

  • Jun 7, 2016

Commentators now label this cyclical advance the “seven-year bull market,” but that won’t be semantically true until the S&P 500 closes above its May 2015 peak of 2130.82.

May 06 2016

“Four On The Floor”

  • May 6, 2016

Leadership, breadth, and corporate credit all staged intermediate-term breakouts, rising above their respective 40-week moving averages. In this formation, historically, S&P 500 annualized return is +15%.

May 06 2016

Sizing Up The Rally

  • May 6, 2016

While our MTI became bullish in mid-April, we can’t rule out that the rebound from February lows could be an impressive bear market rally. However, this rally sports impressive technical credentials.

Nov 06 2015

“Top In” Or “Topping Out?”

  • Nov 6, 2015

The stock market rally has carried far enough to flip some of our trend-following work bullish, lifting the Major Trend Index to a low-neutral reading. The improvement prompted an increase in asset allocation portfolios’ net equity exposure to 42% (up from 36% previously).

Aug 07 2015

On High Alert

  • Aug 7, 2015

August is “National Eye Exam Month,” but this is the rare year we can confidently recommend that you skip it.

Aug 07 2015

Stock Market Observations

  • Aug 7, 2015

The U.S. stock market has largely shrugged off the latest round of worries related to China’s stock market collapse, the new down-leg in crude oil, a more hawkish tone in Fed-speak, and sizable second-quarter declines in S&P 500 sales and earnings.

Aug 07 2015

Weakening Foundation

  • Aug 7, 2015

Over the last few months, we’ve presented a couple of simple quantitative studies meant to encapsulate the factors driving our Major Trend Index to the brink of bear territory. The chart and table might provide the best summary yet.

Aug 07 2015

Fed Watching For The 21st Century

  • Aug 7, 2015

Deteriorating stock market breadth and worrisome leadership trends both suggest liquidity has already tightened; whether the Fed follows suit in September may now be just a formality.

Jun 05 2015

Two Takes On Market Breadth

  • Jun 5, 2015

Market technicians continue to argue that a bull market peak is unlikely to form with the majority of U.S. stocks (and global ones, for that matter) still participating in the new highs of the blue chip indexes.

Jun 05 2015

Penny Wise, Pound Foolish?

  • Jun 5, 2015

The Wall Street technical crowd remains mostly bullish, in large part because breadth accompanying this year’s new high has been decent. We follow the same figures and can’t dismiss their point. But pundits whose market views are heavily reliant upon the NYSE breadth figures should be aware of a strong upside bias that’s existed in the data since around 2001.

May 08 2015

Flying By Instruments

  • May 8, 2015

The safest highs to sell in the stock market are “lonely” new highs. Fortunately, the April 24th bull market high in the S&P 500 was anything but, as that index enjoyed a varied swath of Large Cap, Small Cap, and foreign company (although the DJIA was a mysterious no-show).

May 08 2015

Two Takes On The Ticker Tape

  • May 8, 2015

Conventional breadth measures show the U.S. market to be healthy, with key indexes confirming the April 24th S&P 500 high. However, sector leadership is behaving in a way that’s consistent with an approaching market top.

Apr 08 2015

What The Market Tells Us About Fed Policy

  • Apr 8, 2015

Poor performance in 2014 by two typical victims of Fed tightening—Consumer Discretionary and Small Caps—corroborated our argument that “tapering” is tightening.

Sep 09 2014

Elevated Short-Term Risks

  • Sep 9, 2014

The S&P 500 and NASDAQ Composite moved to new bull market highs in early September, but our quantitative work continues to warn there’s a least a short-term speed bump ahead for the stock market.

Sep 09 2014

Market Breadth And Leadership

  • Sep 9, 2014

While the lagging action of Small Caps should be monitored, persistent strength in most stock market breadth measures makes it difficult to argue the stock market has entered a true “distribution” phase.

Sep 09 2014

Stock Market Valuation Check

  • Sep 9, 2014

Stocks might look superficially cheap relative to bond yields, but they continue to offer little appeal in an “absolute” valuation sense.

Sep 09 2014

Why We Think Tapering Is Tightening

  • Sep 9, 2014

We believe the first move toward tighter policy occurred in January when the Fed first reduced the rate of its monthly bond purchases by $10 billion to $75 billion.

Sep 09 2014

Premature Inflation Fears

  • Sep 9, 2014

With commodity prices falling in recent months and consumer prices in the Eurozone almost flat over the latest 12 months, we’re surprised that inflation fears continue to climb the list of U.S. investor worries.

Sep 09 2014

Share Buybacks: They’re Not For Everyone...

  • Sep 9, 2014

Share repurchase activity in the S&P 500 dropped off in the second quarter, after first quarter buybacks challenged the all-time high levels seen in the second and third quarters of 2007 (a window of history that should ring a bell).

Sep 09 2014

The Bond Bull And The Dollar

  • Sep 9, 2014

Surging bond prices in Europe have opened a yield gap with the U.S. This premium favors more dollar strength in the coming months. In equity markets, the short term volatility in the dollar is a mildly bearish signal.

Sep 09 2014

Boring Is Best In The Forex Markets

  • Sep 9, 2014

Statistically, stocks perform a bit better in an environment of dollar strength than dollar weakness. The best stock market action, however, occurs when there’s relative calm in the forex markets.

Sep 09 2014

A Catalyst For Energy?

  • Sep 9, 2014

While a new secular bear market in commodities commenced in 2011, we still look for tactical opportunities in commodity-oriented stocks to arise from time to time.