The trend is your friend it has been said. Yet as markets have made numerous new record highs this past year and a half there has been a continuous trend of shrinkage. That of high/lows that is. This trend suggests that this market is increasingly reliant on fewer stocks to make these new index highs.
The data shows a consistent drip from new high to new high:
None of this has produced a sizable correction yet, but it’s clear that new highs are not supported by the larger market, but rather by isolated pockets of strength. Powerful strength mind you, but without an expansion in participation.
The longer term chart shows that this market has gone without any significant selling for several years now and is approaching a time commensurate with previous historic stretches of calm:
Precedence suggests that long periods of calm are eventually subject to sudden exit events. So don’t be surprised by a sudden red spike lower on the chart above. The last red spike of note occurred back in 2011. Even the October 2014 almost 10% corrective move barely makes a dent on the chart. One must wonder what damage a real spike lower could inflict on a very thin market.