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Market Breadth Worries

nasdaq-upside-volume-as-of-total1

One of the things that has me worried is that even thought the broader market index readings continue to move higher, we are seeing a significant drop off in the number of individual companies that are going up. In fact, as the chart above shows, upside volume as a percentage of total volume on the NASDAQ (one of the breadth indicators I find most reliable) has fallen off the chart.

I’m looking for a bit of a pullback in the near-term to alleviate this breadth issue, but as long as the Federal Reserve continues its strategy of monetary stimulus, there is a floor under stock prices so the pullback will be viewed as a buying opportunity for investors.

In fact, yesterday, Fed Chairman Bernanke reiterated that their goal is to increase the value of the stock market by any means necessary (to paraphrase him) so I have the feeling that the old adage to not fight the Fed seems to be the right strategy, at least for now.

Mark