The Market's Soldiers Show Up

The Market's Soldiers Show Up

In the last few months, I have seen many folks who play the big-cap indexes, but not necessarily individual stocks, scoff when I mention breadth. It doesn't matter, they say. Just look at how great Nasdaq and the S&P have done with poor breadth. They are correct. But I maintain that breadth is to be thought of as the soldiers on the battlefield and the mega-cap, index-moving stocks should be considered to be the generals. When the generals are in charge, there are a handful of stocks to pile into, and so they tend to go up ridiculous percentage moves each day, leaving everything else in the dust. When the soldiers are leading the charge, there are so many more opportunities to find places to make money. That means good breadth provides more opportunity. Sure, the down-and-outers might not move 20% or more in a day, they might only move a few percentage points, but there are more of them to pick from. When the number of stocks making new highs is expanding, there is more to choose from. When the number of stocks making new lows is expanding, there are fewer stocks to choose from. Wednesday saw the soldiers hanging tough and the generals off the field. That's why the indexes were down, but breadth was positive. That's why the indexes were down, but net volume was positive -- heck 70% of the volume on the New York Stock Exchange was on the upside with the S&P down 15 points ...
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