by Dana Lyons
Recent highs in the major stock averages have not been accompanied by broad participation.
With the major stock indices continuing to score new all-time highs, the market appears to be a well-oiled machine right now. However, looking under the hood, we find that, at least recently, the market has not been firing on all cylinders. We have 2 pieces of evidence regarding yesterday’s new high in the Nasdaq 100 (NDX) to support that diagnosis in today’s Charts Of The Day.
First off, while yesterday’s 0.23% gain in the NDX wasn’t exactly electrifying like last Friday’s Amazon-led rally, it nevertheless was a 52-week high. Despite the new high, though, there was not a whole lot of participation among stocks at the Nasdaq exchange. In fact, at just 33.8% of all issues on the exchange, the percentage of Advancing Issues was the 7th lowest ever on a day the NDX hit a 52-week high.
And if we combine the mere 45% of Advancing Volume on the exchange, yesterday was among the thinnest new highs on record going back to the 1980?s in the NDX.
Taking a look at the broader small-cap Russell 2000 Index (RUT), we see another manifestation of yesterday’s thin new high in the NDX. Specifically, despite the NDX’s new high, the RUT was actually down over 1%. That marked just the 5th 1% loss ever in the RUT on a day the NDX scored a 52-week high.
This chart shows the 9 times the RUT lost at least 0.9% coinciding with an NDX new high.
So was yesterday’s NDX high merely an outlier coming on the heels of a well-participated rally since August? Or has that participation run dry, leaving the market in serious danger once the relatively few advancers turn south?