The Stock Market’s Underlying Weakness: These Charts Show The Issue.

How much favorites like NVIDIA
SPDR Dow Jones Industrial Average ETF Trust
, Apple, Amazon, Meta Platforms and Microsoft have affected thinking about the recent index “new highs” — while other components fail to get there is apparent when the fullness of the “above the moving average charts” are examined.

The heavy weighting of the big cap tech and social media names is disguising a clear underlying failure to keep up among stocks in the indexes. One of the reasons for this week’s selling — besides the CrowdStrike issues — is a growing recognition, however slow it’s been in coming, that most equities lack strength.

Stock Market Index Charts Showing Weakness.

The chart of S&P 500’s per cent of stocks now trading above the 50-day moving average is here:

Compare that chart to the S&P 500 daily price chart:

While the index itself continues to hit a steady stream of new highs, from November 2023 to July 2024, the number of stocks trading above their 50-day moving averages just keeps declining. It’s a series of lower highs from the January high to the March high to July high.

Here is the Nasdaq 100’s per cent of stocks now trading above the 50-day moving average:

Compare the above chart to that of the Nasdaq-100 daily price chart:

The index representing the big cap tech industry hits a high in March, sells off and then recovers to another new high in July. Note how on the chart for the percent of stocks above the 50-day moving average, a decline appears from December 2023 to the present. Most components are failing to perform like the handful of favorites.

The NYSE Composite’s percent of stocks now trading above the 50-day moving average:

And here’s the NYSE Composite’s daily price chart:

This shows the wider view: it contains all of the stocks that trade on the New York Stock Exchange. The chart shows a high in March, a slightly higher high in May and an even higher high in July. Note how the chart above it shows how the percent of stocks trading above 50-day moving averages tends to go in the opposite direction.

Typically, in an on-going bull market, you want to see both types of charts headed in the same basic direction. Right now, that is not the case and it’s a concern to those who follow divergent characteristics such as these.

Additional price chart analysis at johnnavin.substack.com.

No artificial intelligence was used in the writing of this post.