‘Bad Breadth’ is the latest ridiculous reason naysayers insist stocks are doomed

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Look this bull market in the mouth, and it seems like four out of five doctors will tell you it’s got a classic, open-and-shut case of “bad breadth.” Stocks have rallied for the past nine months de…

in the mouth, and it seems like four out of five doctors will tell you it’s got a classic, open-and-shut case of “bad breadth.”

In fact, this diagnosis reeks of quackery. And I’d like to explain why this is important for your financial health. The data — almost always when a very small percent of stocks are leading the market stocks — are markedly higher 6, 12, and 24 months later as “breadth” broadens. Bad “breadth” comes early and low and is bullish.

We’ve already seen the market drop quickly and dramatically. On top of that, we’re still awash in bearish sentiment. As previously discussed in this column, this– whether it’s the Fed, the Ukraine invasion, or the latest banking crisis – is actually bullish for stocks.

 

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