One of my favorite ways to track the broader market is by the number of advancers and decliners in a given time period. Since the quarter closed yesterday I thought I’d share a chart that compares the advancers to decliners at the end of the quarter. The data goes back to 2000 and I’ve added the closing price of the $SPX itself to show a few peaks on the number of decliners.
In looking at the peaks of decliners you can see that the $SPX still had more room to the downside. As of the close of the quarter yesterday there were 431 declining stocks compared to 68 advancing (for the quarter). The most recent peak was 12/31/2008 where we had 459 decliners compared to 38 advancers with a closing price in the $SPX of 903.25. As the breadth improved the next quarter, the $SPX closed down another 11.6 percent at 797.18.
Bottom line is that, according to what has happened in the past, it looks as though there is still room for the downside in this quarter. Obviously there are different catalyst each quarter and we are now in the summer months, but I still find the data compelling. Please feel free to chime in via the comments below.