S&P 500 shows signs of market breadth deterioration despite being near all-time highs, with over two-thirds of recent Bollinger Band signals indicating oversold conditions
Analysis of Bollinger Bands on Monday, September 1st, showed that while the S&P 500 Index (SPX) was within 1.5% of its all-time high, over two-thirds of more than 100 recent Bollinger Band signals across individual stocks indicated oversold conditions (closing below their lower bands). Historical data since 2016 suggests that similar market breadth deterioration, where the SPX is near highs but many stocks are oversold, has led to slight outperformance in the short term (two weeks) but underperformance one and three months later. Apple (AAPL) was one of the few stocks recently signaling above its top Bollinger Band, which historically has not been a bearish signal for the stock in the short term.
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