Study: what happens next to the stock market when breadth surges


The stock market’s breadth was very strong today. More than 80% of NYSE stocks are advancing today AND more than 80% of today’s volume is positive. This is the first such occurrence since late-February 2018.
In this study we’ll look at what happens next to the S&P 500 when

At least 80% of BOTH NYSE issues and volume are positive, AND…
This is the first signal in 3 months, AND
The S&P 500 is at least 3% below all-time highs (e.g. right now).

Here are the S&P 500’s forward returns.

Conclusion

This is neither a bullish nor bearish sign for the stock market on any time frame. The forward returns are pretty much random. This is why I don’t like to use breadth indicators for short term predictions. They aren’t very predictive of future performance.
Click here for my other market studies.

Leave a Comment