Earlier this week , we talked about how there was something weird happening with the stock market. Let’s just say the vibes are still a bit off as Friday’s open approaches. On Thursday, 324 S & P 500 stocks closed lower on the day. That marks the ninth straight day of negative breadth for the benchmark, the longest such streak going back to September 2001, according to Bespoke Investment Group. Bespoke also noted that there are now five S & P 500 sectors in oversold territory, while three others are overbought. The remaining three are neutral, the firm said. What makes this so head-scratching is the fact that stocks continue to mark to record highs. The S & P 500 hit an all-time high earlier this month, and the Nasdaq Composite broke above 20,000 for the first time this week. “The consolidation beneath the surface persists as the ebullient sentiment flagged from a couple of weeks ago continues to slowly burn off. Not often you see 9 consecutive days of negative breadth for the S & P and yet the index is less than 1% off the highs,” wrote Rob Ginsberg, strategist at Wolfe Research. Entering the week, there were other signs of deteriorating breadth. BTIG’s Jonathan Krinsky noted that about 60% of S & P 500 components were trading below their 50-day moving average. That has improved slightly through Thursday’s close as now 52% of stocks are below the short-term technical measure, though it’s still not great. Historical performance after such bad breadth is somewhat mixed. Krinsky said the S & P 500 saw more gains for a few days during the two other instances of bad breadth based on 50-day moving averages before enduring steep declines. Bespoke pointed out that after more than eight days of declining stocks outnumbering advancing ones, the S & P 500 has seen a median gain of 12.4% in the following year. The next big test for stocks comes next week, with the final Federal Reserve policy meeting. Investors largely expect the Fed to cut rates by a quarter-percentage point. Big call of the day Elsewhere Friday on Wall Street, Goldman Sachs named Uber Technologies a top pick heading into 2025. “Uber is mired in a series of short-term debates (pricing inflation and competition impact on mobility growth) and medium/long term industry concerns (the impact of autonomous vehicles on supply/demand if not outright disintermediation). Against that backdrop, we see a company that can continue to deliver on its February 2024 Investor Day commitments despite the rise of autonomous vehicles,” the bank said.
Something odd is still happening with the stock market
Dec 13, 2024
