S&P 500 Price vs Breadth
Monday, June 7, 2010 at 09:52AM Just as a doctor often checks out a patient's vitals in gauging their overall health, traders will often monitor the market's internals as a sign of its underlying strength or weakness. One of the most popular market internals is breadth, which measures the net number of stocks in an index that rise or fall on a daily basis. A look at the S&P 500 shows that for now at least, the index's breadth is a lot less sick than the overall index. While traders are now busy watching to see if the index will hold the February lows in terms of price, breadth remains comfortably above the lows from that period. In fact, as of Friday's close, the cumulative breadth of the S&P 500 was still above the highs from January.
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Reader Comments (2)
With large movements breadth always lags as there is a finite number of stocks that can either decline or advance but their percentage movements have much wider boundaries. For instance, a 3% could easily put A-D's at +/-2800 for the NYSE but a 5% or a 10% change would do about the same.
Does that mean the market is not yet oversold and can sink much further!?