This Bull Market Is Narrowing As It Advances...Market Breadth Continues Deteriorating

The advance-decline ratio is a market breadth indicator that compares the number of stocks that closed higher with the number of stocks that closed lower than their previous day's closing prices. It's a useful tool to understand whether there is broad participation in a market move or if a few very large cap stocks are driving indices one way or another.

We like to look at this data point from various time perspectives. For a longer term perspective, we look at the 200-day moving average of the advance-decline ratio. We also look at the one-year cumulative advance decline ratio. This is a one-year running total of the advance-decline ratio.

The main point here is that no matter how we slice it, market breadth is deteriorating as the rally continues on. Participation is narrowing which would imply the foundation of this bull market is showing some cracks. Below are some charts that visually display this deterioration.