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“The brave may not live forever – But the cautious do not live at all” – Richard Branson

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Yesterday was another one of those days when price moved in one direction while breadth went the other way. While the S&P 500 fell 1.3%, a net number of 15 stocks in the S&P 500 finished the day higher. The scatter chart below shows the daily moves of the S&P 500 (y-axis) this year versus the net daily breadth readings (x-axis). Whenever a dot falls in any of the shaded areas, prices and breadth moved in the opposite direction, and occurrences in the darkest shaded areas indicate days when the S&P 500 finished the day up or down 0.5% and breadth moved in the opposite direction. Yesterday (red dot) was one of five days this year when the S&P 500 was down 0.5% and breadth was positive. Not only that, but it was the first time since April 2000 that the S&P 500 was down 1%+ and breadth was positive.

Yesterday was the 34th day this year that the price and direction of the S&P 500 moved in opposite directions.  If it ended today, this year’s total would already rank as the seventh-highest number of days where the two moved in the opposite direction.  But the year isn’t over yet, and if the current pace keeps up over the next five and a half months, the total number of divergent days for the S&P 500 would total 62, easily setting a record dating back to at least 1990.

In terms of extreme divergence days, yesterday was the 9th time that the S&P 500 rallied (or declined) at least 0.5% and breadth moved in the opposite direction. That already ranks as the fourth most occurrences for a calendar year since 1990.  If this pace continues for the rest of the year, there will be 17 occurrences. That would put this year in the position of the second most of all-time, trailing only 19 occurrences in 2000.

It’s never good to find yourself in a world of comparisons to 2000, but when it comes to daily divergences between price and breadth, 2024 has a lot of similarities.