The S&P 1500 Composite Index is a great way to follow the broad market, by including the big caps, small caps and mid caps in one chart. This represents a broad view of the market or “participation” as a result. Further, breaking down the three components into an advance decline and high low percent indicator gives us a great way to check for relative strength or weakness. Use this method to confirm your opinions about market direction.
S&P 1500 Composite Index
The S&P 1500 Composite Index is trending with its histogram of stocks high low percentage printing the highest peak in advancing stocks in seven years. Weakness is confined to the top 10 big cap growth/tech stocks that are pushing the Nasdaq lower. Those 10 stocks comprise more than 50% of the weight of the Nasdaq-100, so using another method of determining market direction is needed.
Momentum has shifted in recent weeks, as more money flows out of growth into value stocks. Focusing on XLB, XLE, XLF, XLI at this time reminas the smartest option. The intermediate and long-term trend is still intact.
S&P 1500 Composite Breadth
Breaking down the three components to illustrate breadth is especially useful. Small caps are shown in the lower panel. More stocks are advancing as the indicator made a new high. Big caps are close to making a new high, while mid caps lag only marginally.
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