S&P Failed Breakout

Bears have been talking about bad breadth and a market of “just seven stocks” for a while now. But it wasn’t going to matter until those 7 stocks started to rollover. That’s because their size means that they can cover up a lot of underlying weakness in the market cap weighted indexes. Indeed, those 7 stocks are worth more than 7 entire sectors of the S&P combined!

But those 7 stocks are starting to get hit now and it’s showing up in the major indexes. For example, today’s (Thursday November 6) candle in the S&P has created a Failed Breakout from the huge candle that defined the market’s range for a couple weeks from Friday October 10.

Indeed, the Equal Weight S&P (RSP) is threatening to break down through the bottom of that candle.

Today also had some really nasty selloffs in lesser stocks. Most notable was DoorDash (DASH) which shed 17.45% on what I thought was an excellent quarter. Elf (ELF) and Carmax (KMX) also got slaughtered on earnings.