The primary way that I measure market strength is to look at the number of stocks that are moving up more than 10% during the day.
In very strong markets, there can be hundreds of stocks that are up that much. These pockets of momentum are the sign of speculative interest. Most big caps never make moves of that size, so it is more a measure of small, more speculative stocks.
Typically when there are many stocks making big moves, then the indexes are strong, as well. The reverse also holds true. When the indexes are weak, there will be very few stocks making big moves.
The current market environment is particularly unusual. While the S&P 500 and Dow Jones cruise to new all-time highs, there are almost no pockets of strong momentum. I see only 13 stocks up more than 10%. With the S&P 500 and Nasdaq up more than 1%, that is highly unusual.
The explanation for this action isn't complicated, but it doesn't occur very often. This is almost all big-cap names that are moving. Small caps are being totally shut out of this action. Today all the FATMAAN stocks saw gains, but breadth was only three to two positive.
This is great action for major funds that are holding big-cap names, but it is downright lousy action for individual traders that are looking for pockets of momentum to trade.
Eventually, this action will resolve itself, but there is no way to know when or how that will occur. If you are feeling frustrated by this action, rest assured that you are not alone.
I seldom recall more unhappiness with a market that has indexes hitting new highs like this one.
Have a good evening. I'll see you tomorrow.