{"id":20781,"date":"2023-04-05T07:30:46","date_gmt":"2023-04-05T11:30:46","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20781"},"modified":"2023-04-05T07:30:46","modified_gmt":"2023-04-05T11:30:46","slug":"breadth-so-bad-that-its-good","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/breadth-so-bad-that-its-good\/","title":{"rendered":"Breadth So Bad, That It\u2019s Good"},"content":{"rendered":"

Andrew’s Note: <\/strong>Before we get to Clint Brewer’s essay, I want to remind you of Jeff Clark’s big event tonight at 8 p.m. ET.<\/p>\n

A historic reset is about to hit the markets, and Jeff is urging everyone to move their money into a rare vehicle<\/a> by May 1. The last time we saw a sell-off of this magnitude, readers had the chance to double their money 14 different times.<\/p>\n

Now, you have the chance to buy into this unconventional vehicle at a historically low price to potentially double, triple, or even quadruple your money. For more details and a free recommendation from Jeff, click here<\/a> to join him tonight.<\/p>\n

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The stock market has caught investors by surprise…<\/p>\n

Despite facing the worst bank crisis since the 2008 financial sector meltdown, we saw solid gains for the first quarter.<\/p>\n

The Nasdaq Composite even managed to jump 17% – its best three-month stretch since 2020.<\/p>\n

However, this action in the market is concerning… Because the number of stocks driving the Nasdaq and S&P 500 gains has dwindled. And that’s leading to plenty of calls that this rally is in jeopardy.<\/p>\n

Let me give you an example…<\/p>\n

The 19 largest technology stocks added $2 trillion to their market cap in the first quarter. But meanwhile, over 80% of all listed stocks were trading below their 50-day moving average (MA) near the end of the first quarter.<\/p>\n

While popular indexes were painting a rosy picture, many stocks were stuck in downtrends.<\/p>\n

Participation in the stock market’s underlying trend is referred to as breadth<\/em>. And if there’s one defining feature of 2023, it’s that breadth has been terrible so far.<\/p>\n

But before you rush for the exits, you should consider that when breadth is so bad – it can be good.<\/p>\n

How to Use Breadth<\/h2>\n

There are different ways to use stock market breadth to help you determine a potential change in the stock market’s direction.<\/p>\n

One common method is to use participation to assess the strength of the stock market’s underlying trend. When fewer stocks are participating, that means the underlying trend is crumbling.<\/p>\n

You can also use breadth to monitor extremely oversold conditions… a sign of selling pressure that indicates a washed-out market.<\/p>\n

When the number of stocks in downtrends hits an extremely low level, that’s a good sign most investors are throwing in the towel – which could be your next buying opportunity.<\/p>\n

<\/p>\n

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Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

Breadth is Washed Out<\/h2>\n

The McClellan Summation Index is a breadth metric that track signs of markets becoming overbought or oversold.<\/p>\n

This indicator is built by looking at a trailing difference of advancing versus declining stocks on the New York Stock Exchange. When it’s moving higher, that implies gaining stocks are outpacing falling ones and vice versa.<\/p>\n

And something interesting is happening with this gauge…<\/p>\n

Last week, under-the-hood selling in the market reached an extreme. You can see that in the chart below where readings of -500 and below mark oversold levels.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

Not only did the index touch that level, but it’s starting to improve and turn higher.<\/p>\n

I apply a 10-day MA (red line) to the index to generate buy and sell signals, and you can see a positive crossover recently occurred (green circle).<\/p>\n

On March 29<\/a>, I showed you how fearful sentiment could support a rally in the stock market. Now, with breadth hitting bearish extremes, this rally could have more room to run.<\/p>\n

Best regards,<\/p>\n

Clint Brewer
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

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READER MAILBAG<\/h2>\n<\/div>\n

What are your predictions for the current market rally?<\/p>\n

Let us know your thoughts \u2013 and any questions you have \u2013 at feedback@jeffclarktrader.com<\/strong><\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This washed-out indicator just gave a buy signal…<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[82],"newsletter-type":[],"ticker":[],"class_list":["post-20781","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-clint-brewer"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20781"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20781\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20781"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20781"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20781"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20781"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}