For those unfamiliar with the term, we consider an “all or nothing day” to be one where the S&P 500’s net daily A/D (advance/decline) reading is greater than +/-400. Throughout the financial crisis and most of the current bull market, the frequency of all or nothing days increased substantially relative to the years before. The reason for the increase was a one-two punch of an easy Fed and ETFs. As far as the Fed is concerned, easy money and low-interest rates increased the attractiveness of equities relative to other asset classes. More importantly, though, ETFs provided an easy vehicle for investors to gain exposure to stocks while minimizing company-specific risk. The result was an environment of a rising tide lifting all boats and vice versa, and the chart below says it all. From 1990 through 2005, there were just two years where the S&P 500 saw a double-digit number of all or nothing days, but from 2006 through 2017, their frequency exploded and there wasn’t a single year where there were less than ten all or nothing days.
In 2017, though, all or nothing days fell by the wayside as there were just three such days in the entire year. One reason for the lack of extreme single-day breadth readings was that volatility was low, so there simply were not a lot of days where the S&P 500 was up or down 1%. In addition to that, 2017 was also a very weak year for Energy and stocks in the Consumer Discretionary sector not named Amazon (AMZN), and because these two sectors on a combined basis account for about a quarter of the names in the index, it was hard to get strong daily breadth readings.
This year, however, all or nothing days are back in a big way. Through the first five months of the year, there have already been 12 such days, which puts the index on pace for 29 on the year. If that were to occur it would be the largest number of all or nothing days in a single year since 2015 when there were 38.