Breadth Update

A useful tool to analyse the market, is to check the breadth. It gives us a very good idea of market internals and what the broader market is doing.

The chart shows that while SP500 has made higher highs, the percentage of stocks trading above the 50 day moving average has gone down. In other words there is a divergence.

Similarly the chart above shows the number of stocks making new highs has gone down while the SPX has made new highs.

Does this mean the market will crash tomorrow? No ways. The market can continue to go higher and soon this percentage can also make a higher high. But it does allow us to be cautious.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: