The table below shows the performance of a universe of mid and large cap U.S. equities, broken down by relative strength decile and then compared to the universe return. Those at the top of the ranks are those stocks which have the best intermediate-term relative strength. Relative strength strategies buy securities that have strong intermediate-term relative strength and hold them as long as they remain strong.
Last week’s performance (7/8/13 – 7/12/13) is as follows:
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Posted by: JP Lee
Measurements of market breadth are a staple for technical analysts. Market breadth refers to measures of participation. Common market breadth indicators would include things like advance-decline lines or the NYSE Bullish Percent.
This has got to be one of the more hated rallies I can remember, possibly because so few people have been on board for it. But some measures of market breadth are confirming the move to new all-time highs.
Josh Brown of The Reformed Broker highlighted a chart of market breadth recently, as you can see below.
Source: The Reformed Broker, Bloomberg (click on image to enlarge)
This breadth breakout appeared on July 9 and the S&P 500 powered higher from there.
The typical take on market breadth from market technicians is that negative divergences in breadth will normally appear prior to a drop in the market. That’s not what’s happening now—in fact, just the opposite is the case. Market breadth expanded this time prior to the stock market moving to an all-time high.
Bulls and bears can both be articulate. It’s easy to listen to a well-spoken commentator who presents just one side of the story and have it feel very convincing. It’s useful to look at market-generated data as a check; sometimes the data has a very different picture of the issue.
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Posted by: Mike Moody
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