1/ A Look at Market Breadth
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1/
A Look at Market Breadth
It is always important to dig into the details when we are looking at markets. One of the best ways to do that is with market breadth.
Not surprisingly, market breadth has been very weak over the last few weeks. Here’s a chart of the Russell 3000 with the new high / low membership counts over 3 lookback timeframes (1 month, 3-month, and 12 months). The yellow shaded area shows that since the February highs the daily number of members making new highs have been overtaken by those making new lows, resulting in the negative histogram over the last 16 days, with Friday March 14th having 64 new 1-month highs, versus 196 new lows, for a net value of -132:
Past performance is not indicative of future results
The index will struggle to make gains if these market internals don’t show signs of improvement, starting with more 1-month highs – which is what happened in January as marked by the black arrows.
Another measure is the Breadth Thrust indicator which takes the 10-day exponential moving average of the daily number of advancers divided by the sum of advancers minus declines. The chart is coloured green when the Breadth Thrust value is above 55, turning to red below 45 – which happened on February 12th for the S&P1500 stocks as it just crossed the threshold, and creating a divergence with the price chart. We’ll see if these breadth measures improve over the coming days.
Past performance is not indicative of future results
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Originally posted 18th March 2025
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