Good morning,
Unfortunately, we’ve got to talk about breadth again.
Breadth is commonly misunderstood, as epitomized by the chart below which appeared in Bloomberg just 10 days ago.
That’s not breadth. That isn’t breadth at all.
Like all ratio charts, it simply shows you the performance of one group of stock relative to another. But the largest stocks can outperform the average S&P 500 stock while both are going up or both groups are going down.
However, breadth becomes a concern when a small but narrowing group of stocks are going up and an increasing number of stocks are outright going down. And that is what we’ve seen over the past month or so.
As the S&P 500, Russell 1000 Growth Index, and Nasdaq 100 were all hitting 52-week highs on Friday and recording new all-time weekly closing highs, the following indexes and ETFs were logging their 3rd consecutive weekly decline.
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