Narrowing Names

After three days in the desert sun
I was looking at a river bed
And the story it told of a river that flowed
Made me sad to think it was dead
--America

When stock market rallies get long in the tooth, breadth tends to narrow. Traders swap out of names no longer working into the few that still are.

Here's a tidbit. Over the past *3* months, fewer than 40% of S&P 500 component stocks have beaten the index.

When the S&P was at a 52-week high at the time, this is the fewest % of outperformers in at least 15 years.

The only other days with < 40% were in October 2007. https://t.co/suswHMQsJA

— SentimenTrader (@sentimentrader) February 20, 2020

This time around stocks left standing include the familiar FAANG suspects plus names like Microsoft (MSFT) and Tesla (TSLA).

When traders leave these names, there will be no horses left.

no positions