Earlier this week , we talked about how there was something weird happening with the stock market. Let’s just say the vibes are still a bit off as Friday’s open approaches. On Thursday, 324 S & P 500 stocks closed lower on the day. That marks the ninth straight day of negative breadth for the benchmark — the longest such streak going back to September 2001, according to Bespoke Investment Group. Bespoke also noted that there are now five S & P 500 sectors in oversold territory, while three others are overbought. The remaining three are neutral, the firm said. What makes this so head-scratching is the fact that stocks continue to mark to record highs. The S & P 500 hit an all-time high earlier this month, and the Nasdaq Composite broke above 20,000 for the first time this week. “The consolidation beneath the surface persists as the ebullient sentiment flagged from a couple of weeks ago continues to slowly burn off. Not often you see 9 consecutive days of negative breadth for the S & P and yet the index is less than 1% off the highs,” wrote Rob Ginsberg, strategist at Wolfe Research. Entering the week, there were other signs of deteriorating breadth. BTIG’s Jonathan Krinsky noted that about 60% of S & P 500 components were trading below their 50-day moving average. That has improved slightly through Thursday’s close — now 52% of stocks are below the short-term technical measure, though it’s still not great. Historical performance after such bad breadth is somewhat mixed. Krinsky said the S & P 500 saw more gains for a few days during the two other instances of bad breadth based on 50-day moving averages before enduring steep declines. That said, Bespoke pointed out that, after more than eight days of declining stocks outnumbering advancing ones, the S & P 500 has seen a median gain of 12.4% in the following year. The next big test for stocks comes next week, with the final Federal Reserve policy meeting. Investors largely expect the Fed to cut rates by a quarter-percentage point. Big call of the day Elsewhere Friday on Wall Street, Goldman Sachs named Uber Technologies a top pick heading into 2025. “Uber is mired in a series of short-term debates (pricing inflation and competition impact on mobility growth) and medium/long term industry concerns (the impact of autonomous vehicles on supply/demand if not outright disintermediation). Against that backdrop, we see a company that can continue to deliver on its February 2024 Investor Day commitments despite the rise of autonomous vehicles,” the bank said.
