Measuring Breadth Since January 2018

From the desk of Tom Bruni @BruniCharting

My presentation at Chart Summit 2019 focused on market breadth and how we like to keep our process of looking at the subject pretty simple.

While that presentation covered a number of our methods of measuring the market's internals, in this post I want to share some stats we pulled this weekend that help provide some valuable context around the market's rally from the December 24th lows.

The table below outlines the major US Indexes we cover with performance stats from important inflection points: The January 2018 highs, the September 2018 peak, and the December 24th low.

We also have some additional stats listed like percentage below 52-week high and above 52-week low, days since those events occurred, whether the daily RSI reading is in a bullish or bearish range, and whether prices are above their 200-day moving average.

The columns we want to pay attention to for now are the first three.

Click on table to enlarge view.

The rally from the December lows has been fierce, with all 27 indexes positive at a median return of 17.79%. By looking at those stats from only one timeframe one might conclude that we're out of the woods and that stocks are back in rally mode...however, backing up to the January or September 2018 highs tells a much different story. Only 2 of 27 indexes are above their January 2018 highs, with a median return of -4.56%.

Bull Markets in stocks begin when they exceed their prior peak, so until we do that, these stats would argue for a more of a "hot mess" of a trading range than anything else.

Another important takeaway from this chart is in the performance numbers. By looking at the outer tails of performers, we can spot the trends we want to be participating in on the long and short side. Among the best performers across both timeframes are the Growth Factor and Technology Sector, while the Value Factor lags considerably.

If you want to be in the areas of the market showing the most relative strength and weakness, this simple exercise gives you a great high level view of the playing field that you can then drill down into further to identify the plays you want on your team.