{"id":69611,"date":"2024-07-13T21:43:33","date_gmt":"2024-07-14T04:43:33","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=69611"},"modified":"2024-07-13T21:47:09","modified_gmt":"2024-07-14T04:47:09","slug":"market-breadth-surges-toward-overbought-as-indices-get-toppy-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2024\/07\/13\/market-breadth-surges-toward-overbought-as-indices-get-toppy-the-market-breadth\/","title":{"rendered":"Market Breadth Surges Toward Overbought As Indices Get Toppy – The Market Breadth"},"content":{"rendered":"\n

Stock Market Commentary<\/strong><\/h2>\n\n\n\n

Last week further emphasized the continuation of notable divergence from Q2 to Q3<\/a>. This time, soft inflation data caused a surge in rate cut anticipation that in turn drove a significant rotation away from big cap growth and tech stocks and toward small caps and a whole host of other rate sensitive sectors. I covered the impressive dynamics in “Now the Market Just Needs Rate Cuts<\/a>” in Inflation Watch. In particular, the breakout in small caps looks significant and sustainable even as the S&P 500 and the NASDAQ now look toppy. The bears have let numerous toppy moments slip through their fingers, so they have a lot to prove during this latest round of toppiness. In the meantime, I am back on watch for a test of overbought trading conditions.<\/p>\n\n\n\n

A long-time reader pointed me to two amazing charts from June 18, 2024 in “Fed Awaits Better Inflation Data, Treasury Yields Continue To Decline<\/a>” that show the lopsided advantage held by big cap stocks. The imbalance looks particularly dramatic in Q2 given only the largest decile eked out a gain for the quarter (at the time). Year-to-date the biggest stocks wielded a significant performance advantage. This imbalance is the tip of the iceberg of notable divergences in market breadth.<\/p>\n\n\n\n

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