S&P 500 Down Days Show Record Positive Breadth, Signaling Rotation
Over the last 20 S&P 500 down days, an average of 239 stocks finished positive—the highest on record and triple the 2022 bear market level. This suggests investors are rotating rather than exiting equities.
During the past 20 S&P 500 down sessions, an average of 239 index components closed higher, the highest reading on record. That figure is triple the levels seen during the 2022 bear market and nearly double the 20-year average of 133 stocks.
Since June 1, nine of the last 14 down days in the S&P 500 saw approximately 64% of index names end higher. In contrast, only about 32% of down days over the past year had more stocks rising than falling.
The data implies that market weakness is being driven by an increasingly narrow group of stocks. Investors appear to be rotating within the equity market rather than pulling out entirely, as market breadth remains unusually strong during periods of decline.
Source: The Kobeissi Letter