Unveiling Market Breadth

Matthew Allgood |






While the market closes in on its all-time highs, an examination of the market breadth suggests a potential turning point. Market breadth refers to the number of stocks in an index performing above their usual levels. In the S&P 500, a substantial percentage of companies are trading significantly above their average prices for the past 50 days. Historically, such heightened levels have often preceded market pullbacks, indicating a potential overheating of the market. When a large proportion of companies are trading at these elevated levels, it tends to signal a cautionary note.

These moments of market euphoria, where we see the market hitting all-time highs, can tempt investors into making hasty decisions. There's a tendency for people to take on increased risk just to join in on the growth. Our commitment remains steadfast to a disciplined investment approach, one that sidesteps emotional reactions and remains grounded in our strategy.



Unveiling Market Breadth


A graph of a stock market

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Source: Bloomberg, Redwood. Data as of 12/22/2023. Date ranges from 12/22/17 - 12/22/2023.


  • We believe capital preservation is key to consistent, long-term investment success.
  • Our investment approach is grounded in economic theory and backed by quantitative analysis.
  • Managing drawdown risk is a pillar from which we build our portfolios.



Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss.  Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above.



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