Broken Bulls, Big Breadth: Weighing a Case for a Turn in Stocks
- Extreme low equity exposure points to urgency to chase rally
- Double breadth thrusts historically herald larger gains in S&P
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Like clockwork, a decent few days lift stocks, and out come the charts. Have equities bottomed? Evidence is arrayed to argue this time is different, that this is the bounce that will last. Heeding it now requires conviction bordering on credulity.
The data in the bull camp are as follows: a third big week in five for small caps, signs exchange-traded fund buyers have become healthily demoralized, and measures of market breadth expanding in ways that have signaled further gains in the past. While roughly as many features of the latest rally were present in those that fizzled earlier in the year, this one has now outlasted all of those, even with Friday’s hammering.