A Tale of Two Markets

On Wednesday, we saw a bull market high in the S&P 500 Index (SPY; blue line) and an all-time high in the Dow Jones Industrial Average. At the same time, the Russell 2000 Index chalked up a two-week low. The result is that we actually had a day in which more stocks on the NYSE, AMEX, and NASDAQ registered 65-day lows than highs (pink line) on a day in which large caps made new highs.

We can see that, since April, the rally has become more selective as we've moved higher. Indeed, according to the Barchart site, Wednesday's highs were accompanied by 603 stocks making fresh 20-day highs, but 1225 making new 20-day lows!

Nor is the selectivity of the rally confined to small caps. DecisionPoint reports that only 35 S&P 500 stocks made new 52-week highs on Wednesday, down from about 90 in April. And only 6 of the Dow 30 issues made annual highs.

Many have commented on the persistence of this rally. Now, perhaps, they will also marvel at its shrinking base.