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The S&P 500’s decline today wasn’t even 1%, but breadth came in very weak.  Within the S&P 500, the net advance/decline (A/D) reading was -455, which is the weakest daily breadth seen since 10/11/16 and the first “all or nothing day” for the S&P 500 since the election.  As long-time readers are aware, we consider an “all or nothing day” to be a day where the S&P 500’s daily net A/D reading is either above +400 or below -400.  All or nothing days have recently become increasingly uncommon; entering today there was just one occurrence in the last 50 trading days which was near the lowest levels of the entire bull market. At the current level of 2, there haven’t been many periods during this bull market where the rolling 50-day total was this low.

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Even with the recent drought of all or nothing days, thanks to some volatility early this year, this year’s total of 28 isn’t low by longer term historical standards, although it is on the low side relative to recent history.  Since 1990, 2016 ranks as number eight in terms of most all or nothing days, but over the course of the last ten years, there have only been two other years (2013 and 2014) where there were fewer.  What really stands out about today’s occurrence is that it is only the sixth downside all or nothing day since 1990 (out of 262 occurrences) where the S&P 500 was down less than 1%.  What is also notable about the prior five occurrences is that they all occurred since 2011.  We have long argued that the increased popularity of ETFs and passive investment strategies has led to increased correlation between individual stocks where a rising tide lifts all boats and vice versa.  The fact that all of these downside all or nothing days with less than a 1% decline have occurred in the last few years only reinforces that argument.

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