over 1 year ago • 1 min
If you haven’t heard of “market breadth”, you’re missing out. The nifty measure tells you the proportion of S&P 500 stocks that are trading above their 200-day simple moving average. Think of it as a tide that lifts all boats: when market breadth is ticking upward, it means more companies are doing better overall, indicating what’s likely to be a more sustainable move. That’s a handy tool to have in your stock-picking box, as it could reliably indicate a stronger rally or incoming price reversal, helping you make more informed investment decisions. After all, the S&P 500 tends to be buoyed up by a few mammoth companies like Apple and Microsoft, and their strength can hide weaknesses in the many other smaller companies in the index.
As for today, check out the chart above: you’ll see that market breadth is looking pretty promising right now, and that’s one of the reasons why Morgan Stanley’s chief investment officer and chief US equity strategist is staying tactically bullish into year end, targeting around 4,150 on the S&P 500.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.