Percentage of shares from S&P 500that hit a new 52-week high. Source: Bloomberg
On Monday, the US stock market began to decline from record levels, which has continued for the third day in a row. And this reversal coincided with a rather interesting event.
On Monday, the percentage of S&P 500 stocks hitting a new 52-week high was 45%, a record high in the history of such statistics since 1990, according to Bloomberg data.
On the one hand, this can be seen as a final short squeeze that often precedes a market reversal. On the other hand, the strong dynamics of the “market breadth” indicator, which is the difference between the number of rising and falling securities, is usually considered a bullish signal for the market.
It looks like the broad market rally ahead of the reversal remains the main encouraging factor for buyers in the face of a noticeable deterioration in the technical picture after the recent decline.