Displaying items by tag: breadth

Friday, 10 August 2018 08:28

The Market is Stronger Than It Looks

(New York)

The market finally had a down day yesterday (with the exception of the Nasdaq) after a good recovery. That said, many are worried about the market’s breadth, as most of the gains this year have come from just the six FAANG stocks. However, Barron’s notes that “just three sectors out of 11 are up more than the S&P 500 this year—that would be tech, discretionary, and health care—seven sectors have stronger breadth readings than the S&P 500, and all except energy have more than half their stocks trading above their 50-day moving average”.


FINSUM: Market breadth seems to have improved considerably over the last month, and generally speaking, the fundamentals underlying the market look healthier.

Published in Eq: Large Cap
Thursday, 09 August 2018 09:17

Stock Breadth is Getting Very Worrying

(New York)

Morgan Stanley has put out a warning about the worryingly declining breadth of the stock market this year. The bank says that “Fewer stocks are carrying the load of the market, a sign of exhaustion and, in our view, a bad signal for further price gains”. The bank appears to be quite correct. According to the article “Bloomberg points out that Amazon.com, Netflix and Microsoft accounted for 71% percent of the S&P’s gains through early July. Along with Apple, Alphabet and Facebook, they accounted for 98% percent of the gains”.


FINSUM: Honestly that could not be a more worrying sign on breadth. 98% of gains from from 6 stocks. That does not spell widespread strength. However, earnings have been good for the last month (when the reporting period for these stats ended), so gains may have been better lately.

Published in Eq: Large Cap
Tuesday, 29 May 2018 08:19

A Summer Storm is Coming for Stocks

(New York)

Investors beware, US stocks may be in for a real summer storm. On the surface things have been looking better. Despite a week in which many geopolitical events went wrong (e.g. trade war, Trump and North Korea, Italian bonds/government), the markets stayed strong. However, underneath the positive surface, there is some real bearishness. The average stock in the S&P 500 is underperforming the market as a whole by almost a whole percent. The S&P 500 is up 3% this year, but the average stock has gained just 2.1%, showing that market breadth has narrowed.


FINSUM: We do not think the current market breadth figures show much of anything, but then again, we are more concerned about the overall economy than the signals the market is sending.

Published in Eq: Large Cap
Tuesday, 15 May 2018 09:52

Stocks are Flashing a Lot of Warning Signs

(New York)

The bond market saw ten-year yields move higher yesterday, up over 3% in fact. Despite the rise, stock markets eked out a small gain. Some would consider this a positive sign. However, Barron’s is arguing the opposite, contending that the lack of market breadth lately may indicate that a recession is on the way.


FINSUM: We favor market breadth as a good indicator of sentiment. When investors think things are good, all sectors tend to rise, when they feel bearish, those gains tend to be isolated. Notice how the Nasdaq has risen considerably this year while other markets are flat. This is a good indication of how investors are feeling.

Published in Eq: Large Cap
Wednesday, 18 April 2018 08:00

Why Stocks are Rising Again

(New York)

Stocks have managed to turn around from their dire condition of a couple weeks ago, and from last week, have rallied well. So, what has driven the turn around, investors are probably asking. According to Barron’s, part of it is earnings, but there is more to the story. The apparent answer is that market breadth and sentiment are improving across the board, which is helping provide positive momentum. It also isn’t hurting that earnings have been strong across the board.


FINSUM: We think the more positive sentiment is just from a lack of bad news on the trade war front. No news is usually good news in such a situation and fear ebbs so long as no new developments are released.

Published in Eq: Large Cap
Page 2 of 2

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…