Strong Market, Weak Breadth

The S&P 500 is rallying to its highest level since May this afternoon, as the index has been making a series of higher highs and higher lows since its June low.  While the S&P 500's price has been in a steady uptrend, cumulative breadth for the index has actually been pretty weak.  As shown in the lower chart, with each successive higher high in the index, breadth has actually been making a lower high.

Typically, it is optimal to see breadth trends confirming the moves in price, but the recent narrowing of breadth is indicative of fewer stocks participating in the rally, and likely a sign that more managers are underperforming.

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