Inside Markets — Consolidation

Narrow market breadth is a bearish internal signal that deserves attention if it lasts more than a few sessions. Yesterday, 77% of the SPX ended the day lower with Mag 7 names doing the heavy lifting. If you take yesterday’s performance of NVDA and MSFT out, the SPX would have been down ~30bp. Market concentration is another potential issue with the market cap of the Mag 8 (including AVGO) now accounting for 69.4% of the Nasdaq 100 (NDX). While the narrow breadth may not last, it’s clear the broader market is struggling to keep up with Tech and credit spreads are also finding it difficult to tighten from current levels. In our view, these internal dynamics increase the likelihood for period of consolidation.