From the desk of Willie Delwiche.
The S&P 500 continues to make lower highs as new lows have approached, but not broken below, new highs. This breadth signal occurred as the S&P 500 was peaking in January. It re-emerged near the March and August highs and appears to be doing so again.
Why It Matters: New high versus new low crossovers are usually fueled more by changes in the new low list than the new high list. New highs edge up slowly in the early stages of a bull market and can peak well before the indexes. The post-COVID bull market was a great example of that. But regardless of the driver, history shows it is important that they take place. As the longest bear market since the Financial Crisis has moved along, investors have been itching to turn more optimistic. But so far the price action (on the surface and below) isn’t doing much to change anyone’s mind or give rise to the increase in bulls needed to have a bull market.
In this week’s Sentiment Report we take a closer look at persistent pessimism and how investors so far haven’t matched word with deed.