In recent weeks there has been much written and said in the financial press regarding the narrow breadth, or narrow participation, within the market. The graphs below illustrate this in different ways. The first graph shows the percent of New York Stock Exchange (NYSE) listed stocks that are trading above their respective 50-day moving average. As this graph illustrates, while the S&P 500 and the NASDAQ 100 indexes have advanced off the December lows, the number of stocks participating in the advance has actually remained quite low near 40%.

Chart from StockCharts.com

Another way to view market participation is to compare a weighted index (the way most indexes are created) with its equal-weighted counterpart. The graph below shows both the weighted and the equal-weighted version of the NASDAQ 100 Index. This index is being heavily skewed by the influence of 8 tech stocks. The lack of participation can be seen in this graph by the lagging performance of the equal-weighted index that is NOT as skewed by the 8 leading tech stocks. 

Chart from FastTrack.net

 The graph below shows the weighted (regular) and the equal-weighted S&P 500 Index. This graph shows much of the same characteristics as the graph above.  The graph below shows both the weighted and the equal-weighted version of the S&P 500 Index. This index is also being heavily skewed by the influence of the 8 leading tech stocks. The lack of participation can be seen in this graph by the lagging performance of the equal-weighted index that is NOT as skewed by the 8 leading tech stocks. 

Chart from FastTrack.net

Best,

The Trademark Capital^® Team

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