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My stream went from breadth is terrible to breath is beautiful in the span of a week.
The low was 45 days ago and the Wilshire 5k is up 35% so a 50-d moving average will show a lot of stocks are above it. That’s how math works
The low was 45 days ago and the Wilshire 5k is up 35% so a 50-d moving average will show a lot of stocks are above it. That’s how math works
Careful with ‘strong breadth’.
Similar breath (~90% above 50-d) preceded two long sideways periods in 2004-05.
85% of $SPX was above its 50-d at the Oct 2007 top. That’s objectively strong breadth
Similar breath (~90% above 50-d) preceded two long sideways periods in 2004-05.
85% of $SPX was above its 50-d at the Oct 2007 top. That’s objectively strong breadth
(Cont). Likewise, strong breadth preceded three different harsh corrections in the past 10 years $spx
Because stock markets have a very high propensity to go higher over time, ‘bad breadth’ is a good sign of a washout low. Like bearish sentiment. Good breath not quite the same
Why? If investors are buying a wide variety of stocks, they’re being less selective and careful: i.e., they're risk-seeking and bullish, which is when trouble sometimes arrives. Tricky
For 2 months, pundits have been hating the weak breadth in the market: equal-weight and geometric mean indices lagging, only tech and health leading, etc. Now, +35% later, breath signals the all-clear...
