Market Breadth Indicator: Large Cap Stocks In Favor

It’s been a tough market to figure out for traders. And with so many pieces of research that work both for and against market bulls and bears, it’s apropos that the stock market has been stuck in a trading range.

Today, I’d like to look at another slice of the research pie, looking at market breadth. In fact, I’d like to look under the hood of a key market breadth indicator for stocks.

While market breadth, as measured by the commonly cited NYSE Advance-Decline Line has been strong as of late, when we drill deeper we can see where that strength has specifically been coming from. This chart shows the Advance-Decline Line for each market cap segment, large, mid, and small cap stocks.

The ‘biggest’ breakout in market breadth has come so far from the large cap portion of the market while a slight break has occurred for mid cap stocks. Small cap market breadth is still slightly under it’s prior high.

This tells us that investors are showing a stronger preference for the larger, and some may consider ‘safer’ equities rather than chasing after smaller company’s stocks.

Just a slice of research to ponder as you look ahead to the summer months.


S&P 500 Index (SPX) vs Small, Mid, and Large Caps  (Advance-Decline Line)

market breadth indicators small mid large cap stocks chart_june 2

Thanks for reading and have a great rest of your week.

The information contained in this article should not be construed as investment advice, research, or an offer to buy or sell securities. Everything written here is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.

More From Andrew:  Volatility Market Showing Signs Of Complacency


Twitter: @AndrewThrasher

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.


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