On a Wednesday when the Dow was down almost 2% and the S&P 500 down nearly 1.8%, it’s no surprise that market breadth was very weak. For the S&P 500 as a whole, just 25 stocks in the index were up on the day. What makes today’s sell-off even more severe is that breadth was not only bad here, but it was also very poor on the other side of the Atlantic where only 12 stocks in the entire STOXX 600 were up on the day. On a combined basis, just 37 of the 1,100 stocks in the S&P 500 and Euro STOXX 600 were up on the day, and that doesn’t happen very often. The last time breadth on both sides of the Atlantic was this week was on August 5th, and there have only been 30 trading days since the start of 2009 where the combined number of advancing stocks in the two indices was less than 50.
The chart below shows the S&P 500 going back to the start of 2009, and in it we have included red dots to denote each time there was similarly weak breadth. Prior to the two most recent occurrences (today and 8/5), you have to go all the way back to September 2015 to find the last one. What’s interesting to note about these prior occurrences is that nearly all of them came in bunches during periods where the market was in consolidation/correction mode. In fact, the only one that occurred in isolation during a market uptrend was on 6/20/13 when the market freaked out about the Fed’s ‘taper’ program. Remember that one? Start a two-week free trial to Bespoke Institutional for full access to our research and market analysis.