Monday, September 29, 2014

An Updated Look at Stock Market Breadth

Here's an update to the recent posts on weak breadth in the stock market.  The above chart tracks the number of common stocks across all U.S. exchanges that have made three-month highs vs. lows .  You can see that the new highs minus lows measure was quite weak at the recent market peak and now new lows have fallen below their early August level.  This continues the pattern of weak breadth.

Note, however, that new lows bottomed thus far on 9/25 and have held above that level.  Interestingly, my measure of Buying Pressure has registered above average levels for the past two trading sessions.  It appears that the recent low levels have attracted fresh buying interest and the first signs of downside divergence are appearing.  So far, we have seen price lows with weaker breadth, but those lows have occurred at higher price levels.  Thus far, nothing is happening to alter that pattern.