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Market Breadth is Narrower Than You Think

edited June 2018 in Off-Topic
I’m seeing little day-to-day change. Doesn’t seem to matter anymore (for my holdings) if the major stock indexes gain or lose. Wonder if that's because all the action is in just a handful of stocks - particularly the FANGs - which I suspect I’ve relatively little exposure to.

Some see such narrow breadth as worrisome. Others think it’s a good sign. I just plain don’t know.

https://www.marketwatch.com/story/the-stock-markets-breadth-is-narrower-than-you-think-2017-05-30

Comments

  • edited June 2018
    @hank and others,

    Breadth is one of the feeds of Old_Skeet's market barometer. The breadth for the S&P 500 Index as measured by the number of stocks trading above their 200 day moving average has been running in the high 50% to low 60% range for the past month or so. Thus far this year I have observed breadth readings in the high 80% to low 50% range. No doubt the number of stocks (within the Index) trading above their 200 moving average has been in declined since February and remains so from the January highs within this average.

    However, in tracking the number of stocks within the Index trading above their 50 day moving average the range movement was in the high 80% (January ending) to about 15% (the first week of February and also during the last week in April) and has been climbing since then with a current reading in the mid 60% range.

    With this ... it seems the breadth readings for the Index have been improving of late.

    In addition, some folks use the RSI (Relative Strength Index) as a breadth indicator; however, to me, it follows the momentum in price movement. This is the reason I use the method I have described above as I feel it is more fully reflective of the actual breadth for the Index.
  • edited June 2018
    I thought recently the higher highs of Total Stock Market Index were being used to suggested broader stock market is back. If you compare VFINX vs VTSMX, the latter is closer to taking out its all time high.

    Or maybe weighted indexing is still at play in VTSMX as well? I imagined that effect would be reduced than in VFINX.

    @Old_Skeet - You looking at something like these?

    http://stockcharts.com/h-sc/ui?s=$NYLOW&p=D&yr=0&mn=11&dy=0&id=p32090632028
    http://stockcharts.com/h-sc/ui?s=$NYA50R&p=D&yr=0&mn=6&dy=0&id=p75494428212

  • edited June 2018
    Hello @VintageFreak,

    For me, breath is defined as the range of movement measurement in something. That why I use what I have described and explained above. I am not following what you are trying to get accross because you are compairing the 500 Index against the Total Stock Market Index whereas my analysis is confined to the 500 Index alone. What are your breadth readings for the two Index's you reference and for what period of time do they cover?
  • edited June 2018
    When I experience a $32 “gain” on Tuesday this week based on combined performance of 14 different (non-cash) funds I get the feeling not much is moving. Should have copied that day’s results for future reference - but I do recall that neither RPSIX (diversified income) or TRRIX (40/60 balanced) moved an inch that day. Most others were flat as well. Lately it’s been the nat. resource, gold, energy and real estate stuff that has driven my portfolio day to day.

    Count me in the bearish camp. By now we bears have become a tiresome “broken record” (for those who remember vinyl recordings). Only thing I can offer-up at this point is an old logger’s expression: “The taller they grow ... the harder they fall.”

    Wishing everyone happy investing - and thanks for commenting on my post
  • @Old_Skeet So I was not trying to compare VFINX vs VTSMX, just quoting ANALysis in the press recently that suggested the "broader stock market showing no signs of abating".

    The URLs was just my attempt to try and simplify the problem. You mentioned stocks trading above 200 MA. One of the URLs I gave was for 50 MA. And I chose NYSE assuming it will better capture "Breadth" than S&P 500. If you see Late Jan and Early Apri crossovers below the blue line it suggests getting out/in of the market.
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