The charts underneath show clearly the recent deterioration of breadth that have the bears chomping at the bit thinking that market a pullback is inevitable. On the flip side the bulls believe that it is only a matter of time before the indices pull all the lagging stocks up and give us a rising tide lifts all boats situation. Time will tell, but it is easy to see why both camps are so adamant.
Here we have the Russell 2000 versus stocks up 25% or more for the quarter and stocks down 25% or more for the quarter. You can see that the amount of stocks down 25% or more for the quarter is rising steadily while stocks up 25% or more in the quarter is in a downtrend while the index sits near highs. (stockbee indicator).
If we take the stats above and cut them in half; stocks up and down 13% or more in the last 34 days shows the same trend, weak getting weaker. (stockbee indicator).
On a shorter term basis here we have the Russell 2000 versus the amount of stocks up and down 25% or more in the last 30 days.
Yesterday I was astonished by the amount of stocks that hit fresh new 1 month lows with the indices pretty much flat on the day.
These breadth stats show exactly why we continue to hear about the terrible breadth that the market as whole is exhibiting, but at the same time you have to appreciate the resiliency of the indices. I think soon enough there will be some catching up, either stocks catch up to the indices or the indices catch up to the stocks. Stay tuned and adjust accordingly.
fzorrilla@zorcapital.com @Zortrades
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