A Technical Look at Market Internals

Market Blog

Following last week’s more than 10% gain, the S&P 500 Index is tracking toward another weekly loss, its fifth of the last seven. This has many investors wondering if a retest of the lows may be in the cards for US equities. As we explored in our How Markets Bottom post, two of the bear markets we believe show the most similarities to our current one did retest or undercut the lows after the worst of the selling.

“Whether or not we get a retest is an open question,” said LPL Financial Senior Market Strategist Ryan Detrick. “But we believe we’ve seen the worst of the selling, and we will be watching to confirm that fewer individual stocks are making new lows on a further pullback in the indexes.”

View expanded chart.

As the LPL Chart of the Day shows, although the S&P 500 made its low on March 23, more stocks actually bottomed a week earlier on March 16, when more than two-thirds of the individual stocks in the index hit a one-year low. Regardless of the direction of the S&P 500 over the coming days, we want to see this trend of fewer stocks making new lows continue.



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