Of the many breadth measures we track, one of the most useful for us is the percentage of stocks making new 52-week highs. When the market rallies and breaks out to a new high, you want to see the list of individual stocks making new highs getting larger. If that doesn’t happen, it is a signal that the rally is narrowing, and it can be a warning that the rally is coming to an end. That’s exactly what we saw in early 2015 when the S&P 500 rallied to new highs while the list of new individual stock highs began to contract.
Conversely, when the market is in a downturn, it is also important to watch the list of new lows to see how much participation there is in the downturn. Last August when equities tumbled, the percentage of S&P 500 stocks making new lows surged to 37.7% of the stocks in the index – the most negative reading since October 2011! The market bounced to close out 2015, but then it turned lower again following the hike in rates in December and the subsequent crash in oil prices. In late January of this year, the S&P 500 tested its August 2015 lows and the percentage of stocks making new lows also dropped down to similar levels (-36.9). From there, there was a feeble rally attempt which failed, but importantly when the S&P 500 broke down to new lows in early February, the percentage of stocks making news lows contracted to just 19.4%. This was a bullish divergence.
So how have new highs been trending in the S&P 500’s most recent leg higher? In a B.I.G. Tips report just sent out to Bespoke Premium and Bespoke Institutional clients, we provide an analysis of trends in 52-week highs for the S&P 500 and each of the ten sectors. We have also included a really interesting screen of stocks that are within 5% of a 52-week high but haven’t traded to a 52-week high in at least a year. To see the entire analysis, please sign up for a monthly Bespoke Premium membership below!
See the full B.I.G. Tips report by signing up for a monthly Bespoke Premium membership now. Click this link for a 10% discount ($89/month).