Does the Stock Market Care About Stocks?
While the Dow Jones Industrial Average makes record highs, many stocks in the market are not following suit. Traders refer to this as a "negative divergence" and it's something every investor should understand.
Michael Batnick wrote about the fact that market internals are not looking particularly great right now, but there's a long term lesson in looking at this data that is evergreen. Investors should keep in mind that it's very rare for every stock within the S&P 500 to be making a new high together.
It's probably more typical to have a balance of new highs along with some stocks that aren't looking so great. Additionally, whenever one is looking at market breadth through the lens of the NYSE Composite, they should remember that it incorporates lots of instruments that act more like bonds and trade based on interest rates - closed-end funds, REITs, Utilities, etc.
Josh Brown and Michael Batnick of Ritholtz Wealth Management discuss.
Read Michael's original post on the topic here:
https://theirrelevantinvestor.com/2018/10/03/the-end-is-nigh/
Talk to us about your investments here:
https://ritholtzwealth.com/
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