Tuesday, October 26, 2021

Morning Note: Good Breadth, But Not Everywhere -- And -- A Quote for the Young to Heed

I've seen several blurbs of late on how positive breadth readings are for the S&P 500 Index, particularly the comparison between advancing and declining members.

That, the cumulative advance/decline line, is one of the breadth measures we diligently track, and, yes, it indeed says good things about the present state of market affairs.

Here's our long-term working chart for the S&P 500's:

Here we'll zero in:  Note how the A/D line (bottom panel) has broken to a new high along with the S&P 500 (top panel):

This morning's breadth however isn't jibing with the early morning rally. 

I.e., while the S&P 500 is up an impressive 0.48%, as I type, nearly half of its members are in the red. In terms of sectors, it's really about tech so far this morning as healthcare and most things resource are in the red, while industrials are flat and the rest, save for energy, are underperforming the average. 

Speaking of tech, the Nasdaq Composite is up a not-small 0.75% to start the day. However, speaking of breadth, just over half of its members are presently trading lower... hmm...

And speaking of cumulative advance decline lines, here's our chart for the Nasdaq Comp (A/D line in bottom panel):

Not a good look!!

Now, with tech presently occupying 27% of the S&P 500's overall weighting (something we haven't seen since the late 90s), well.... just another thing to keep an eye on...

Asian equities leaned green overnight, with 10 of the 16 markets we track closing higher.

Europe's up this morning, with all but 6 of the 19 bourses we follow in the green, as I type.

US major averages are feeling good (accelerating as I type [but still sketchy breadth]) as well: Dow up 130 points (0.36%), SP500 up 0.64%, SP500 Equal Weight up 0.25%, Nasdaq 100 up 1.19%, Nasdaq Comp up 0.97%, Russell 2000 up 0.22%.

The VIX sits at 15.30, up 0.39%.

Oil futures are up 0.35%, gold's down 1.27%, silver's down 2.55%, copper futures are down 0.27% and the ag complex is up 0.37%.

The 10-year treasury is down (yield up) and the dollar is up 0.05%.

Led by AMD (chip maker), Indian equities, semiconductor stocks, energy stocks and Eurozone equities -- but dragged by MP (rare earth miner), silver, gold, Latin American equities, base metals futures and metals miners -- our core portfolio is up 0.14% to start the day.

Boy, can I relate to the following from Leon Levy in his essential The Mind of Wall Street:
"I might warn a Young Turk incessantly about the horrors of a crash or bad market, but I will not likely make an impression on one who hasn’t lived through the experience. If societies can forget and then repeat the horrors of war, they can certainly forget the temporary ruination of a stock market crash."

I'm not, mind you, predicting a crash.... just sayin....

Have a great day!

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