The Nasdaq 100 advanced for seven consecutive months before falling in November. Is this a bad thing or does November's late month breadth thrust leave us something to look toward?

After such a strong year for the domestic space, November rang in the start of the seasonally strong part of the year with a bit of a hiccup. While the S&P 500 was able to (somewhat surprisingly) squeeze out a 13 basis point gain for the month, the Nasdaq-100 wasn’t quite as lucky. As the intra-month decline was focused on larger tech & growth focused names rather than the “average” stock, the NDX returned to a sell signal on its default chart as it tumbled as far as 8% off its all-time highs. The 1.64% decline for NDX in November was its first negative calendar month since March of this year, marking a break of seven consecutive months of gains. As we all know, markets can’t go up everyday (or every month for that matter) but declines can certainly feel scary… especially as news headlines flash concerns about an AI Bubble around the corner. With that in mind, we can look back in history at other instances of “significant” streaks ending to see what exactly might have in store for NDX going forwards. There are only four other instances since the start of 1993 during which NDX advanced for seven straight months, listed in the table below. Forward returns (median and average) are quite positive, seeing the Nasdaq 100 gain over 25% over the next year. There is something to be said that a handful of these instances came off significant market bottoms which is markedly different than today’s environment just around all-time highs. Regardless, the point revealed by this data set is that markets haven’t been scared off by streaks ending, often they have been healthy opportunities to buy in.

This idea grows further when observing the expansion of breadth markets saw at the end of month. The “average” S&P 500 stock had a much more productive November, seeing SPXEWI gain nearly 1.75% throughout November compared to the previously mentioned .13% gain for the cap weighted SPX. Small caps also stormed back to positive, fueled by a 3.57% rally for the RUT during the final week of the month. All this to say, breadth improved across the board. NDW uses several different indicators to measure breadth, many of which have been featured in the report over the last week or so. Many of you will be familiar with the Advance/Decline Ratio, which counts the number of stocks in a universe that “gained” (moved higher) over the total number of stocks in the universe (those that both advanced & declined.) In plain English, this ratio attempts to depict whether more stocks are moving higher or lower, with higher numbers suggesting more stocks are contributing to upside action. While this ratio can be applied to any universe, the one we will focus on today will be ^NYSEAD, which uses the stocks listed on the NYSE as a starting universe. For context, we smooth out these daily values over a 10-day period to prevent wild swings in data but zoomed in over the last five days (the end of November) during the big end of month breadth thrust. During that 5-day period, ^NYSEAD averaged just over 72%. The table below highlights a handful of other instances during which that metric was hit. Forward returns and overall positive hit rates are quite good across the board.  

All this to say, while markets seemed to stumble in November, the long-term picture remains largely intact. Breadth was (and still is) the largest concern challenging markets as we wrap up 2025… and while it will undoubtedly be a point to watch in December things look to be improving for now.