[Chart Of The Week] U.S. Stock Market Breadth Has Weakened in April
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Today we are looking at a chart of the list of NYSE Common Stock Only New 52-week highs. It's important to consider what the actual stocks are doing on the NYSE, since half the issues on that exchange are closed end funds, preferred stocks and other types of securities that are not common stocks. In order to get a gauge of stock market breadth, this is just the list of stocks making new highs and as we can see, with all of the major indexes putting in new highs the past couple of weeks, the list of stocks participating has decreased:
We've been neutral towards the U.S. Stock Market over the past few weeks as our upside targets got hit. I'm still in the camp that we roll over and if/when we are below former support levels, we can start to lay out short positions. In the meantime, we wait. A bullish development here would be to see the list of NYSE Common Stocks Only New Highs increase and take out last month's high water mark. I think this is the lower probability outcome, but I always want to keep an open mind and try to make an argument counter to my current outlook.
If prices of the indexes start to roll over and break the levels we need to start initiating short positions, we will flip this data upside down and focus instead on the list of NYSE Common Stock Only 52-week lows. This will help confirm the lower lows in price. In the meantime, this deteriorating breadth is something to be concerned about if you are a U.S. Stock Market bull. Since we are no longer in the bullish camp, we welcome this weakening market breadth with open arms and are just waiting for prices to start to fall in order to confirm what the internals are already suggesting.
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Tags: $spy $qqq $iwm $mdy $djia
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