Poor Market Breadth Makes This Rally Iffy

By on November 23, 2009

Traders Narrative pointed out last week that as the market was making new highs, the breadth was poor. This means that fewer and fewer stocks are pushing the averages higher. Traders Narrative measures the speed of a rally by comparing the closing daily price to the long term trend as measured by the 200 day moving average (more on this at the source below).

SMA Comment: The market can suffer from poor breadth for a long time. This is exactly what happened leading up to the bear market in 2000. The market was led by fewer and fewer stocks (almost all technology) for most of 1999. In fact, market breadth was probably worse back then than it is now.

Source:

Traders Narrative
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