📈 Market Breadth

Where is the market strength coming from?

Market Breadth

Understanding whether we have breadth in the market is very important. Typically you want to see breadth in a healthy market so you have multiple sectors driving the indexes higher.

Is that what we are seeing? The answer is increasingly no.

The above chart shows you that the Megacap 8 (see the bottom for the stocks included in the 8) are making up an increasing amount of the S&P 500 and is at its highest level ever right now.

In other words, right now 31% of the S&P 500 is made up of 8 stocks. That is what is pushing the market higher.

Does that mean we can’t continue to push? Absolutely not. It just means you need to be aware of this and focusing on these megacap 8 because they are the real drivers behind the market.

Looking at each of these stocks and finding the leaders within them will help you generate trade ideas.

Watch the video below for how I am taking advantage of this knowledge: