Stock Market Breadth Says Don't Trust This Rally

From The Editor Managing Editor’s Note: For months, our colleague Jeff Brown has been chasing a story. He flew to Memphis, Tennessee, to the site of Musk’s Colossus supercomputer. He flew to Boca Chica, Texas, to Starbase. He even flew to a ghost town on the California-Nevada border. All of that boots-on-the-ground research led him to Toronto… to meet an insider in one tiny sector. He’s been out of the public eye for half a decade. But Jeff has convinced him to join him this Wednesday at 8 p.m. ET. Together, they’ll show you an opportunity revealed in the SpaceX IPO filing that proves Musk is about to send billions into this little-known sector. It could hand you gains 125x bigger than what Nvidia investors made during the AI boom. Make sure you don’t miss out. Click here to RSVP instantly. Stock Market Breadth Says Don’t Trust This Rally Is this rally a dead cat bounce or the start of a more meaningful move higher? Written by Larry Benedict Published on Aug 10, 2026 A powerful four-day rally delivered the best stretch for the Nasdaq-100 in over a year. During that span, the Nasdaq jumped by 9.3% and added $3.5 trillion in market value as stocks leveraged to AI spending saw a massive turnaround. That includes semiconductors. The VanEck Semiconductor ETF (SMH) gained 14% over the same stretch. Other indexes are jumping as well. The S&P 500 gained 5.7% over the same four-day period. That was enough to send the S&P to fresh record highs. Now the question becomes: Is this a dead cat bounce in stocks geared to the AI trade, or is it the start of a more meaningful move higher across the stock market? We can turn to stock market breadth for the answer.

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Participation in the Trend Breadth is a way of measuring participation in the prevailing trend. In other words, as indexes are breaking out, how many individual stocks within the indexes are moving higher? There are a number of ways to measure breadth, such as monitoring how many stocks are making new 52-week highs. You can also track the number of advancing stocks relative to declining ones on any given day. Or you can compare the volume in advancers versus decliners. We can also look at how many stocks in an index are trading above key moving averages. When we’re coming off an exceptionally strong period of short-term returns, I look for the presence of something called “breadth thrusts.” Thrusts are extreme readings in the number of advancing stocks relative to declining ones. If we see an abnormally high figure, it indicates very broad and heavy buying pressure – the kind driven by the institutional smart money. Those are the investors needed to sustain a longer-term advance. And when I look at breadth metrics around this most recent short-term burst, I’m not excited by what I see… Tune in to Trading With Larry Live Each week, Market Wizard Larry Benedict goes live to share his thoughts on what’s impacting the markets. Whether you’re a novice or expert trader, you won’t want to miss Larry’s insights and analysis. Even better, it’s free to watch. Visit us on YouTube to catch the latest! Smart Money Isn’t Interested One of the simplest ways to monitor for breadth thrusts is to look at a ratio of advancing stocks relative to declining ones (A/D ratio). You can do that for just about any index or stock exchange. One popular way is to use the A/D ratio for stocks listed on the NYSE. The chart below shows the A/D ratio since the start of the year. During the four days of strong gains, the highest daily reading on the A/D ratio came in at just 2.4 (circle). That means there were a little over two advancing stocks for every declining one on the NYSE. That’s an okay figure on any given day but hardly the stuff that sustains an advance over the long term. It’s well off the best readings seen this year, and it lacks the breadth punch seen during similar short-term rallies. Coming off the lows in April 2025 (when the tariff-driven selloff was driving markets lower), the A/D ratio registered a reading of 37.2, which was the last time the Nasdaq saw a similar short-term rally. Recent breadth metrics tell me that the smart money doesn’t want to own stocks at these levels, and that the large gains were driven by a rally in oversold AI stocks. Since the smart money doesn’t seem to be interested in chasing the rally, you should be cautious too. Regards, Larry Benedict Editor, Trading With Larry Benedict Get Instant Trade Alerts on Mobile! Click the icon below from your mobile device to download The Opportunistic Trader app today for one-tap access to trade alerts, issues, and model portfolios for all of Larry’s services. Available in the app store on Android and iPhone. More stories like this Read the latest analysis on hot growth stocks, and market-moving developments The VIX Says Calm. Your Portfolio Says Otherwise. One of the market's most-watched indicators – the VIX – has suggested calm for weeks. But that's only half the story… Aug 7, 2026 • 3 min read Why the U.S. Just Joined Japan to Prop Up the Yen Japan and the U.S. stepped in to support the yen, and the reason should concern all investors… Aug 6, 2026 • 3 min read Why Being Right Isn’t Enough in Options Trading One of the biggest misconceptions in option trading is that if you correctly predict a stock’s direction, you’ll automatically make money… Aug 5, 2026 • 3 min read 1125 N Charles St, Baltimore, MD 21201 www.opportunistictrader.com To ensure our emails continue reaching your inbox, please add our email address to your address book. This editorial email containing advertisements was sent to reunisoft.cryptonews@blogger.com because you subscribed to this service. To stop receiving these emails, click here. The Opportunistic Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-888-208-6550, Mon–Fri, 9am–5pm ET, or email us here. © 2026 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. Privacy Policy | Terms of Use