My biggest concern with this market over the past three months has been the lack of breadth in this market. 

And today it is hitting new lows. 

While the S&P 500 and Dow Jones Industrial Average continues to hit new highs over the past week, and the Nasdaq and Russell Index not too far behind, only 43% of stocks are actually trading above their 40-day moving average. That is astoundingly low. 

In fact, I am used to seeing the number in the 75-80% range when the bulls are hitting new highs, so we are basically looking at a reading of nearly half that. 

What does it all mean? It means that fewer and fewer stocks are actually pushing the market up to new all-time highs. 

Eventually this comes to a halt, unless stocks as a whole can rebound and begin participating in the rally once again. 

So be careful here – take profits where you can and protect the existing profits by raising those stops because this bearish divergence will eventually be faced with a reckoning – one way or another. 

When doing the technical analysis on the indicator, you’ll see that there is a series of lower lows, and now a violation of key support underneath. Not good!

t2108 market breadth

 

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