Getting a Fresh Perspective on Stock Market Breadth

This morning's post looked at stock market breadth as a useful trading tool.  While it can be helpful to examine the breadth of the entire market, it is also useful to examine breadth on a sector by sector basis.  What we see above is taken from the Index Indicators site:  it tracks the percentage of stocks making 100-day new highs among S&P 600 small cap shares only.  Notice how the small cap index is much further from its late 2013 and January, 2014 highs than its large cap counterpart (S&P 500 Index).  We can also see that, with each rally, fewer small cap shares (in green above) have been making fresh price highs.  Even as the index has moved higher for the past couple of sessions, fewer components have participated in the strength.

The Index Indicators site breaks down new highs and lows, as well as the percentage of stocks above various moving averages, for quite a few indexes (large cap, mid cap, small cap, NASDAQ 100, and even the DAX.  Indeed, if you go on the site and look at the new highs vs. lows for the DAX, you'll see a pattern similar to the U.S. small caps above.  For much of 2013, the rising tide was lifting most boats.  Thus far, that has not been the case in 2014.

Further Reading:  Short-Term New Highs and Lows