Earlier this month we highlighted that although the S&P 500 was rallying to higher highs, breadth had yet to confirm. Fast forwarding to today, the S&P 500 continued to rally through most of August, while breadth as measured by the cumulative A/D line has yet to make a higher high. The red lines in the upper chart show various peaks in the S&P 500 since April, while the red lines in the lower chart show the corresponding reading in the cumulative A/D line at each of the peaks in the S&P 500. As shown, when the S&P 500 made a new higher high earlier this month, breadth failed to confirm. Without breadth confirming the market's rally this summer, traders are certainly on edge heading into September.
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