Yesterday's Weak Breadth

Although the S&P 500 (SPY) had a gain of just under 1% yesterday (yes, eight points in the S&P 500 is now enough for a 1% move), breadth was extremely weak on a relative basis.  Compared to Monday's close, 268 stocks finished the day higher, 224 finished down on the day, and 8 stocks finished unchanged.  On a net basis this works out to +44 (268 minus 224). As shown in the chart below, since 1990 when the S&P 500 has been up by similar amounts (gray shaded area), more stocks have usually finished higher on the day. In fact, of the 493 days where the S&P 500 was up between 0.75% and 1.25%, breadth has only been weaker than today's levels 22 times. Given the declines that the market has had recently, investors who actively monitor their portfolios will be disheartened to see that even though the market was up 1% yesterday, their portfolios likely underperformed the overall market.

Comments

[Kingsley An...:]

The trading ranges on all of the indexes has been tightening as well. We are in for a big move- it looks to me like the break will be toward the downside.

2008 Nov 19 08:30 AM