Quick peak under the hood

Following the SPX strength yesterday, a scan of the Russell 3000 universe of stocks shows that only 149 of them (5%) participated in making their own new highs since the broad market bottomed on Mar. 6. The chart below shows that the 5 day avg of the number of stocks making new cycle highs since that day (using the weekly avg to smooth daily fluctuations). It is evident that participation is thinning each time the SPX swung to new highs in May, June and July. By itself it does not mean that we are looking at an immediate drop, as the divergence can also be resolved with a broadening of breadth, it is something worth keeping an eye on.