Breadth Thrust: A Gigantic Bullish Indicator is Flashing

[Bullitt]

Seems many are "going to cash" due to "uncertainty" come the election just as we get this.

Over the last three months the Invesco S&P 500 Equal Weight ETF (ESP) has outperformed the SPDR S&P 500 ETF (SPY) 13% to 10%. The reason why is that a huge cut of stocks are rising, not just the largest stocks. The last ten days have seen the biggest jump, with advancing stocks outnumbering decliners 2 to 1. That is called a “breadth thrust” and it is very rare and very bullish. It has happened just 29 times since 1990, and 96% of the time the market is higher 12 months later.

https://www.nasdaq.com/articles/a-gigantic-bullish-indicator-is-flashing-2020-10-12

More perspective from Barrons.

Of course, higher in a year is very different than higher next week. While breadth thrusts point to a higher market in the future, they’re often followed by short-term drops. The last one, for instance, occurred on June 5, when May’s payrolls data showed a massive increase in the number of jobs that the U.S. economy had added. The market peaked one day later, and then the S&P 500 dropped 7% over just three days. Still, even including that drop, the index has gained 8.8% since then.

The takeaway: Dips are to be bought. “The market is not going straight up,” Lerner says. “But bull market rules apply.”

https://www.barrons.com/articles/do...-week-as-stimulus-covid-captivate-51602290636

 

[Bullitt]

Just read that of the "500", 174 (34%) have not risen more than 10% in 2020. 25 have gains of over 50%, and 26 have losses over 50%.

176 (35%) of stocks in the 500 are down more than 10% this YTD.

Not sure of the context but it makes sense. Tech up, Oil, Financials, Travel never bounced back.

 

[Bullitt]

Originally posted by Robo last week, but we'll throw it here for context. When this happened in October 2020, things turned out pretty good in the months ahead.

More than 75% of volume on the NYSE flowed into advancing securities. It happened on Monday, too. And Friday.

Across all time frames, the S&P 500's average return was well above random, the average drawdown (risk) was a small fraction of drawup (reward), and there was a much higher probability of a big rise than a big drop.

https://sentimentrader.com/blog/yet-another-breadth-thrust-to-frustrate-shorts/

 

[Bullitt]

According to Lowry's, September 20 was a 89.5% downside day, just missing the 90% downside day that indicates a shift in investor sentiment when it occurs near highs.

To counter that downdraft, a 90% upside day or consecutive 80% upside days will be needed. September 22 was an 86.4% upside day though so that should negate the 20th.