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The latest all-time high happened on some of the worst breadth ever. Yes, while the three biggest US indexes closed at the highest level ever, almost two thirds of stocks ended with a loss. What does this mean?

Tuesday’s all-time high (ATH) was unique. How so? The S&P 500, Nasdaq-100 and Dow Jones Industrial Average all closed at ATHs, but only 36.65% of NYSE-traded stocks advanced that day (on only 35.03% of up volume).

The S&P 500 missed another ATH on Wednesday by 0.3 points (the Nasdaq-100 closed at a new ATH), and only 29.5% of NYSE-traded stocks advanced on 33.8% of up volume.

Such poor participation (breadth) on ATHs is unusual.

In fact, since 1970, there have only been 11 other days where the S&P 500 closed at an all-time high with less than 38% of NYSE-traded stocks advancing on less then 38% of up volume with the cumulative NY Composite advance/decline line lagging (the NYC a/d line finally confirmed the highs on Monday, but lagged again on Tuesday).

As the charts below show, all prior instances happened after 2020.

Why is this happening? It all comes down to mega cap dominance.

Many believe mega cap dominance is detrimental to stocks, but the Profit Radar Report has debunked that myth since it first started a couple years ago.

The charts above show - from yet a different perspective - that bad breadth caused by the mega cap skew is not long-term bearish … at least not in the current environment.

At some point the environment will change, but for now my outlook remains the same.

Short-term pullbacks continue to be buying opportunities.

Gold update:

The October 19, Profit Radar Report warned that risk for gold prices is increasing. Gold topped the next day and fell some 10%. This could have been the brunt of the correction for now.

Continued updates and factual out-of-the box analysis are available via the Profit Radar Report. 

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

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