Stocks: Advance or Retreat?
Kiplinger's Personal Finance|July 2020
Amid the market chaos, investors can gauge whether a rebound will last by looking at market breadth.
Ryan Ermey
Stocks: Advance or Retreat?

THINGS GOT GLOOMY FOR INVESTORS FOR a while. Between February 19 and March 23, stocks in Standard & Poor’s 500-stock index took a Wile E. Coyote– style plunge, losing 33.8% in just a month. Despite uncertainty about the length and severity of the pandemicrelated shutdowns that triggered the sell-off, investors, like the coyote himself, once again grew optimistic, pushing the S&P 500 back up 28.4%. (Prices and other data are as of May 15.)

Lately, the market’s behemoths have been doing the heavy lifting. Just five stocks—Alphabet, Amazon.com, Apple, Facebook and Microsoft—account for 22% of the S&P 500 index’s market capitalization (share price times shares outstanding), a record level of dominance among a handful of companies. So far in 2020, the S&P 500’s five biggest stocks have returned 11.5%, on average. The average loss in the rest: 20.4%. “It’s okay for leaders to lead. But if the market’s generals are headed in one direction and the troops in another, then you have potential problems,” says Willie Delwiche, a strategist at investment firm Baird.

The generals-versus-troops metaphor is a common way of understanding an indicator known as market breadth, a measure of how many stocks are participating in a given market move. For investors practicing technical analysis (forecasting the direction of stock prices based on statistical patterns), understanding breadth is key to determining whether a rally in the stock market will lead to a sustained recovery or is masking further bouts of turbulence and downturns.

Denne historien er fra July 2020-utgaven av Kiplinger's Personal Finance.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

Denne historien er fra July 2020-utgaven av Kiplinger's Personal Finance.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

FLERE HISTORIER FRA KIPLINGER'S PERSONAL FINANCESe alt
MAKING A DIFFERENCE IN THE LIVES OF DISABLED VETERANS
Kiplinger's Personal Finance

MAKING A DIFFERENCE IN THE LIVES OF DISABLED VETERANS

He suffered grave injuries in the line of duty. Now he helps other veterans who have disabilities.

time-read
2 mins  |
November 2024
DO YOU NEED UMBRELLA INSURANCE?
Kiplinger's Personal Finance

DO YOU NEED UMBRELLA INSURANCE?

A policy can protect you from financially devastating events.

time-read
2 mins  |
November 2024
Navigating Finances as a Blended Family
Kiplinger's Personal Finance

Navigating Finances as a Blended Family

Money matters can get complicated when two families unite. Planning is key.

time-read
4 mins  |
November 2024
BREAKING UP WITH YOUR BROKER
Kiplinger's Personal Finance

BREAKING UP WITH YOUR BROKER

Be aware of these challenges when you move your money to a new home.

time-read
5 mins  |
November 2024
CHOOSE A MEDICARE PLAN THAT'S RIGHT FOR YOU
Kiplinger's Personal Finance

CHOOSE A MEDICARE PLAN THAT'S RIGHT FOR YOU

Consider your health care needs over the long term as you weigh costs and coverage.

time-read
9 mins  |
November 2024
Keep Faith in These Stocks
Kiplinger's Personal Finance

Keep Faith in These Stocks

IN 1997, I coined the phrase “faith-based investing.” It has nothing to do with religion or with picking stocks at random.

time-read
5 mins  |
November 2024
OUR ESG PICKS ARE THRIVING
Kiplinger's Personal Finance

OUR ESG PICKS ARE THRIVING

Despite an ongoing backlash, our favorite stocks and funds focused on environmental, social and corporate governance issues had a good year overall.

time-read
9 mins  |
November 2024
MONEY MANNERS FOR THE MODERN AGE
Kiplinger's Personal Finance

MONEY MANNERS FOR THE MODERN AGE

The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.

time-read
8 mins  |
November 2024
ELECTION 2024: POLITICS AND YOUR PORTFOLIO
Kiplinger's Personal Finance

ELECTION 2024: POLITICS AND YOUR PORTFOLIO

Who wins the White House matters—but only at the margins when it comes to your investments.

time-read
2 mins  |
November 2024
YOUR GUIDE TO OPEN ENROLLMENT
Kiplinger's Personal Finance

YOUR GUIDE TO OPEN ENROLLMENT

With health care costs on the rise, it’s critical to select a plan that fits your needs at the right price.

time-read
7 mins  |
November 2024