The Nasdaq and Nasdaq 100 hit new all-time highs and the S&P 500 bounced 0.4% after a losing session on Wednesday, but the primary focus for many market players was the poor breadth. Usually, breadth stats do not receive much attention, but the inconsistency with the indexes Thursday was extreme. Despite the positive action in the indexes, there were around 2,800 stocks advancing on the day while over 4,500 declined. The number of stocks hitting new 12-month highs shrank to just 160.
The obvious explanation for this divergence is that the market is being led by a small group of big-cap stocks. Since all the major indexes -- with the exception of the Dow -- are capitalization weighted, the big names like Apple (AAPL) , Tesla (TSLA) , and Alphabet (GOOGL) offset weakness in thousand of small-cap stocks.
The net result is that the indexes are not very representative of what is really going on in the overall market. But if you are trading the indexes, it doesn't much matter.
This poor breadth is also reflected in slower speculative trading.
The hot day trading and movement in low priced stocks have cooled off substantially and it is much more difficult to catch sustained moves. This is just part of the natural ebb and flow of the market and doesn't mean that disaster awaits, but it has been frustrating for traders who were enjoying some very robust gains a week or so ago.
Overall the market remains healthy, but the poor breadth is an issue. It may clear up just like a bad cold, but we have to be aware that it could develop into something more severe.
It is an interesting market and is best navigated with an open mind and limited conviction.
Have a good evening. I'll see you tomorrow.