COTD Bullet Points:

  • The past week (before Tuesday) has seen outright impressive breadth from the S&P 500 as the 5-day advance/decline line has risen to one of the highest levels of the past decade.

Chart of the Day:

Although equities are pulling back sharply in the wake of the CPI release, leading into today the S&P 500 had taken a straight shot higher since coming back from the Labor Day holiday with the index moving higher each day save for last Tuesday.  Even more impressively, it wasn’t just a handful of FANG-type mega caps driving the index higher.  Breadth has been impressively strong. Typically, we track short-term breadth using the 10-day advance/decline (A/D) line which we update daily in our Sector Snapshot. While that line was basically neutral heading into today, the 5-day A/D line was at the extreme side of historically positive readings.  Reaching a reading of 52.8% as of Monday’s close, the reading ranked in the 99.7th percentile of all days since 1990 when our data begins. As for some other most recent examples of breadth reaching such extended levels, there have been two occurrences in the past year: one near the end of 2021 and one this past May.

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