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The news headlines sound terrific:
“The S&P 500 climbs above 2,400 for the first time.”
U.S. stock indexes rose to new highs as a rally in crude and dollar weakness sparked gains in commodities producers. Emerging-market assets jumped and Treasuries slid.
On the other hand, beneath the surface there’s an ugly divergence. Only 58% of NYSE stocks are above their 200 day moving average today compared to more than 72% in February. This is the lowest reading since October and a sure sign of a very tired bull (market).
FACT: More and More Equity Market “Bulls” are Hiding Out in Fewer Stocks
Bottom line, 26% of the market is controlled by the top 15 stocks, there’s $5T of market capitalization in just those names. So when Apple AAPL, Google GOOG and Amazon AMZN march high, indexes like the S&P 500 which are market cap weighted don’t tell us the whole story. Not even close.
Percentage of NYSE Stocks above their 200 Day Moving Average
The Nasdaq 100 is up 18% on the year while the Russell 2000 is only 2% higher. Forget about the noisy headlines, the truth is MORE and more stocks are being left behind in this bull market.
What’s our List of Systemic Risk Indicators Saying now? Pick up our latest note here:Don’t miss our next trade idea. Get on the Bear Traps Report Today, click here