Markets advanced quite notably on Friday, seeing over 90% of NYSE stocks in the green. What does such a big breadth day mean going forward?
Friday was a good day. Besides being just now one week away from Labor Day, markets were encouraged higher after Fed Chair Powell signaled the possibility of rate cuts in September… seeing major domestic indices jump sharply. Breadth was thankfully quite good, a sentence that has been quite difficult to come by as markets have bounced back and forth around all time highs. It should go without saying that broad based gains (better breadth) can lead to a more productive market environment as more stocks improve their respective technical pictures… but on such strong days it can be an interesting experiment to ask… what exactly does “good breadth” mean and what it might mean going forwards?
8/22 saw over 90% of NYSE-listed stocks land in the green for the day. To put this in context, this has happened only 24 times since 1980, or just about once every two years. Before 8/22, there was a cluster of big breadth days coming off the 2025 lows (4/9/ & 4/22). In fact, clusters of large one-day increases aren’t abnormal. Excluding one-month clusters from our dataset drops our “unique” occurrences to just 15 (including 8/22) confirming the idea that quite often good (and bad days) can happen in close proximity to each other. A quick side note- missing out on clusters of these “big” days can have massive impacts on your portfolio…. Check out this piece here which goes into more detail about missing those massive up & down days. Regardless, refocusing on the >90% advancers days with the table below, returns are typically quite positive. Excluding those clusters, forward returns are quite strong across all observed timeframes. On average, SPX advanced over 24% in the year following our “big breadth” days, building on the idea that constructive market environments are built on the shoulders of many stocks, not just a few. You’ll notice that these high advancer days are typically found around significant market bottoms. Covid & and March of 2009 stick out on that front, both of which brought with them clusters of big breadth days.
What happens when markets aren’t at a bottom? While it may be uncomfortable in the moment, using NDW’s participation indicators to identify points of significant wash out can be comparatively easy to trying to time tops. With that in mind, significant breadth thrusts like we saw on Friday are rather rare when markets are at or near all-time highs. In fact, the ~1.5% distance from all time highs from Friday’s occurrence is the closest SPX has been to all time highs of any of our observations. Of the other instances, only two saw similar breadth days while within ~5% of all-time highs… both of which are the only instances with subpar forward returns. (Note that distance from all time highs is calculated on the day before the date of the breadth thrust to ensure that values aren’t understated due to large performance on day of 90%+ advancers. Overall performance trends don’t change, but it is worth noting.)
It goes without saying that similar moves are rare- particularly within such close striking distance of respective market highs. With that in mind, take today’s study with a grain of salt… by no means is this piece designed to call out a distinct market top. Instead, fall back on the idea that most times… more breadth = more constructive market environments… a net positive as we move into a seasonally rocky September.
