Quick Look At Market Breadth

  • Posted by on July 25th, 2015 at 10:37 am

In the examples below, I am using S&P500 data as a proxy for the market.

First a short-term perspective: About 37 % of the SPX stocks are still trading above their 20-day moving averages. This doesn’t provide an edge for either bulls or bears. Extreme readings have led to mean-reversion in the indexes during the predominantly range-bound market environment of 2015. Oversold readings (reaching a value under 20%) hasn’t always led to an immediate bounce in the averages. For a more sustainable bounce, look for a divergence – bigger percentage of SPX stocks trading above their 20dma while the SPX keeps making new lows.


Things are looking a lot different from a long-term perspective:

The % of SPX stocks trading above their 200dmas is almost back to its levels from October 2014, when  we had an almost 10% market pullback.


The % of stocks, making new 52-week lows is at multi-year highs. The deterioration in any industry even remotely related to commodities has been breath-stopping.


The number of stocks making new 52-week highs has been gradually declining in 2015 and it has now established in a low-value tight range. SPX has managed to keep near multi-year highs thanks to healthcare, financials, tech and consumer discretionary stocks.


The Latest

  • About Over-trading and Under-trading
    Posted by on July 7th, 2015 at 10:17 am

    When volatility picks up, we should become less active and move slower. Hedge fund manager Frank Teixeira has good anecdote on the subject (ht midnight […]

  • My Best Tweets for June
    Posted by on July 1st, 2015 at 10:51 pm

    These are some of my tweets that received the most engagement in June. I filtered them for time sensitivity; hence there are mostly links and […]

  • How Private Markets Are Impacting Public Markets
    Posted by on June 30th, 2015 at 12:40 am

    I believe that active management has a place in everyone’s portfolio. With that said many people might do reasonably well over time if each month they simply dollar cost […]

  • Carl Icahn’s Favorite Setup
    Posted by on June 24th, 2015 at 9:17 pm

    Frank Zorrilla has an interesting piece on Carl Icahn’s position trade in Netflix: Carl Ichan showed the world how he made over $2.1 billion dollars […]

  • Using Overbought Signals
    Posted by on June 24th, 2015 at 9:45 am

    Many traders use RSI to measure overbought and oversold conditions. The textbook says that a reading above 70 is typically considered overbought, a reading below […]

  • About Booms, Bubbles and Busts
    Posted by on June 23rd, 2015 at 9:16 am

    Noah Smith has an interesting piece on bubbles and busts: For the past half-century, the academic macro story has gone something like this: There is […]

  • Risk
    Posted by on June 9th, 2015 at 11:55 am

    Howard Marks’ latest memo on risk has sparked interesting conversations on the web. Mr. Marks points out that volatility is very incomplete definition of investment […]

  • About Bulls, Bears and Pigs
    Posted by on May 26th, 2015 at 12:16 pm

    There’s a popular Druckenmiller’s quote circling the Internet as of late: The first thing I heard when I got in the business, not from my […]

  • The True Nature Of Predicting
    Posted by on May 26th, 2015 at 8:30 am

    Jon Boorman has an interesting piece on the futility of making market predictions. Long time ago, Phil Pearlman wrote an insightful post, pointing out the […]