In recent months, the market was setting records for narrow trading ranges and limited volatility. That changed today as the Nasdaq and Nasdaq 100 ETF (QQQ) blasted higher on great earnings reports from Amazon (AMZN) , Alphabet (GOOGL) and Microsoft (MSFT) , but the folks who focus on market statistics talked about how the narrowness of the move is now the primary issue.
With the Nasdaq up so sharply today, breadth would normally be far better than 2-to-1 positive. Early in the day, Nasdaq breadth was negative for a while but it improved during the day and finished with about 1,800 gainers to 1,100 decliners. That isn't bad, but it is remarkable underperfomance.
Another example of the narrowness is that the NYSE Composite Index, a measure of all the stocks listed on the NYSE, was up just 0.1% today vs. a gain of around 3% for the Nasdaq 100.
This is the second time in a week that the market benefited from a small group of big-caps driving the market higher. On Tuesday, Caterpillar (CAT) and 3M (MMM) drove the DJIA to a substantial gain while the great bulk of the market did little.
Is this narrowness a problem? Should we be suspect of the ability of the market to build further momentum when there are just a handful of big-cap names producing the move?
Narrow markets can always broaden, and that did occur to some extent during the trading today, but if the rally doesn't broaden to include more stocks fairly fast, the foundation for the move will be weak and the risk of a reversal will build. That isn't a concern right now, but that is the reason the narrow breadth is receiving attention.
The bulls are running and the QQQ steamrolled the skeptics again. The big move will receive plenty of media attention, but it wasn't nearly as euphoric as it looked. Nonetheless, the trend is up and trying to call a turn in this market is a very expensive distraction.
Have a good weekend. I'll see you Monday.
Join Jim Cramer, CNBC's Jon Najarian and Other Experts Saturday in New York
Jim Cramer will host CNBC's Jon Najarian, TD Ameritrade's JJ Kinahan, famed analytics expert Marc Chaikin and other market mavens on Oct. 28 in New York City to share successful strategies for active investors.
You can join them as they discuss how smart investors can make the most of options trading, futures contracts, fundamental and quantitative analysis and great ETFs to buy right now. Participants will also get a chance to meet Jim and other panelists and take photos.
When: Saturday, 8 a.m.-3 p.m. ET
Where: The Harvard Club of New York, 35 W. 44th St., New York, N.Y.
Cost: $250 per person.
Click here for the full conference agenda or to reserve your seat now.