In several prior articles, we have explored US stock market breadth as one component of overall market condition and adverse implications for future market direction ( Dec 14, Nov 23, Sep 28, Aug 11, July 30, and times in between).
The breadth observations are not stand alone indicators, and other factors should be taken into consideration (such as the currently supportive yield curve, the currently non-supportive operating fundamentals, such as the negative profits and profit margin picture; but also make reasonable forward judgements about prospective changes to those factors, and your own investment time horizon and short-term risk tolerance).
This article is a quick summary comparison of stock market breadth in selected international markets versus the US.
Breadth for US S&P Market-Cap Indexes
You can see by examining the “% in Bear” row (the % of index constituents that are in a Bear or worse condition) that the smaller the size of the market-cap, the worse the condition of the constituents. The same is true when you examine the “Median % Off High” (the % by with the median stock is below its 12-month trailing high price).
In each case, the median stock is significantly farther below its high than the index is below its high (by about 6.5% to about 11%).
These are all signs of sub-surface trouble with the US indexes.
On the positive side, the percent of small-cap stocks above their 10-day average is significantly higher than for the large-cap stocks, suggesting some possible nascent recovery.
The other three measures (the % of constituents with the tip of the 200-day average moving up; the % with the price above the 200-day average; and the % rising, defined as both the tip pointing up and the price above the average), are roughly equivalent for all the market-cap level indexes.
Leave A Comment