Market Breadth

"DON'T GET LOST IN THE LINES"That's some good advice for artists, it's also good advice for traders. The market is one of the biggest emotional structures in the world where fears and hopes are represented and discounted. It's easy to lose your place and miss the bigger picture and the opportunities within that view.
So tonight, instead of the video that I had planned (which I will bring you this week as it has some crucial examples regarding the market). First though I want to show you an example of the big picture.

This nearly 90% decline today would provide many opportunities, however if you look at even the small bounce in the square, that represents a nearly month long bounce. In that time, it can be very easy emotionally to feel like things have changed, you could have been scared out of a short or wondered "How long can this possibly keep going, 25% of the population is out of work!" However, in the big picture, it's barely noticeable.
One way for us to keep our eye on the big picture is to look at longer charts, to understand that even in the most ferocious bear market, there will be counter trend rallies or in the strongest uptrend, there will be corrections. Emotions aren't a friend of a trader/investor.
Fortunately for us, programs like Worden's TeleChart/TC200/StockFinder offer us indicators to measure the quality of a move. We can then better determine if this is something we should be worried about, or something that we can use to our advantage.
Here's a look at today's market using Worden's T2 series of indicators in green vs the NYSE in red
% of stocks trading 1 standard deviation above their 40 day moving average, these are the really strong stocks.

 Note in October when the market was lower, 75% of all NYSE stocks were trading at least 1 standard deviation above their 40 day moving average. Now with the market even higher, that percentage has dropped by 52% to 35.81%. This tells us that many of the high flying stocks are no longer high flyers, most probably these were stocks that were momentum crowd favorites. This shows significant de-leveraging away from risk assets.

% of stocks trading 2 channels above their long term 200 day moving average. These stocks have been in steady uptrends for quite some time and as such, take a little longer to reverse as the 200 day moving average is a long average and these stocks were already a standard deviation above that average.

Here in November 43% of stocks had achieved this long term objective, now with the market trading even higher that percentage has dropped to 14.76%, a drop of 65% in 5 months!

% of stocks above their 40 day moving average, most stocks in an uptrending market will fall into this category.

In October when the market was lower, over 86% of stocks were trading above the 40 day average, even though the overall market is higher, fewer stocks are trading above the 40 m.a., at the top it dropped to 75%, now it stands at 61%, a significant decline for such a short average.

$ of stocks above the 200 day moving average.

Back at the November highs, when the market was 7% lower more stocks were trading above their long term average then now. Even the most recent bounce has shown some deterioration in this indicator.

Here' a longer look at the same indicator, note the strength in 2009 when 90+% of stocks were above their 200 day, now only 76%

% of Stocks trading 1 standard deviation below their 200 day moving average, these are stocks primarily in primary downtrends.

Between November and now the percentage of stocks trading in downtrends has doubled , even as the market has advanced 

% of stocks trading 1 standard deviation above their 200 day moving average.

In November, 75%, now at 55.76% this class of stocks has dropped by 25%

% of stocks trading 2 standard deviations above their 40 day moving average. These can be stocks that move up very quickly.

In November, the reading stood at 47%, that has dropped by 75% to 13.74%

I think the market breadth shows clearly that this market has been advancing on fewer and fewer issues, a lack of breadth or strength. Considering low market volume and low market breadth, this market is extremely dangerous, it's like standing on the end of a very thin limb.