Since July the SP500 has done nothing but trade sideways, the closing price on 7/1 was 2,102.95, the closing price yesterday was 2,097.94. However, underneath the surface, we have seen some real carnage on individual stocks. The Dow Jones is comprised of 30 stocks; that doesn't tell you anything about what is going on unless all you own is the Dow Jones. The SP500 is comprised of 500 stocks, the top 5 having just as much influence on the index as the bottom 250 combined. In other words, the top 5 stocks can make the index look better or worse than what is actually going on depending on what the top 5-10 stocks are doing.
In the meantime, let's take a look at breadth charts below to get a better feel of the environment (starting 7/1).
SP500 versus 1-month lows
SP500 versus 3-month lows
Here are the stats; the SP500 closed at 2,102.95 on 7/1/2016, it closed at 2,097.94 yesterday, a difference of 5-points. On 7/1/2016 we had 137 1-month new lows and 69 3-month lows, fast forward to yesterday and those numbers stand at 1,642 new 1-month lows and 976 3-month lows in individual stocks, all while the SP500 is only down net 5 points.
The good thing is that spikes in these breadth ratios tend to lead to short-term bottoms (1-5 days).
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at firstname.lastname@example.org or 646-480-7463.