More stocks are participating to the upside, signaling a healthier market

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NASDAQ 100 Index News

S&P 500 Index,United States,Markets

Not only does the market's improving breadth bode well for current prices, but it can also herald strength in the future, according to Bank of America.

In recent weeks, more stocks are participating in the market's move to record or near-record highs. That improved leadership is just what is needed to signal a healthier outlook and put a stronger foundation beneath prices, according to a major Wall Street investment bank. "Market breadth breakouts support the bullish case," Bank of America technical analyst Stephen Suttmeier said in a 29-page report Monday.

What's more, a greater number of rising stocks in the third quarter shows that when there have been brief sell-offs in stocks, such as in early August and again in early September, "that weakness is 'seasonal' and not 'structural.'" Suttmeier looked at the historical trends for ratios of advancing stocks versus declining issues for the 15 most actively traded stocks by volume in the U.S.

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