As a bull market reaches an exhaustion point, market breadth indicators often tend to diverge from the price action of the benchmarks. This “breadth divergence” occurs as leading names begin to falter, and initial selling drives some stocks down to new swing lows. Today, we’ll review three market breadth indicators, outline what tends to happen at the end of a bull phase, and describe what we’d need to see to confirm a likely market top based on historical topping phases. New 52-Week Highs on the Decline As I discussed with my guest Mark Newton earlier this week, one of the most effective ways to gauge a potential market top is to watch for a decline in the percent of stocks making new 52-week highs. What will a contentious election season mean for your portfolio, and how can you position yourself as the market moves through the seasonally weakest part of the…
