Market Participation A Possible Red Flag

August 26, 2015

Despite the recent correction, this summer—and even most of the year so far—has seen the common gauge for the broad market, the S&P 500, move sideways.

This lack of trend seems to have market participants getting a bit antsy, wondering when they will see a breakout that sticks in either direction. It also has market commentators digging a bit deeper into what is driving the market action. Market trend and breadth are seemingly becoming a more popular topic in the mainstream.

Lack Of Movement

The S&P 500 has been stuck in a sideways trend for a majority of the year. Since the end of February through Aug. 19, the S&P 500 has returned -0.22 percent on a total return basis. There are a few interesting notes on the move:

  • The magnitude spent in positive and negative territory since February is very symmetrical. See the chart below, which is the total return line of the S&P 500, with the sum of the negative (red) and positive (green) areas notated.

  • Another example of the lack of trend is that the S&P 500 has crossed above/below its 50-day simple moving average 37 times this year. That is the highest number of crossovers in any year (and we are not even eight months in!)

Find your next ETF

Reset All