The Breadth Data Confirms It Independently

CNBC (Sep 30): about three quarters of S&P 500 stocks fell in September while the index sat about 1% below its August record. Gains in Apple, Nvidia, Alphabet, Microsoft and Meta masked weakness in most of the index. Morgan Stanley: the share of S&P 500 stocks above their 200 day moving average fell to 49% from roughly 75% over the summer. Mike Wilson's team said the divergence between the index and breadth must be reconciled. Bloomberg (Sep 30): the equal weight S&P 500 was on track for a seventh straight weekly decline, which would be only the third time ever. The first two were 2002 and 2022. Financials were the worst sector in September, down nearly 7%, and the KBW Bank Index entered correction territory after peaking in mid August. Nasdaq's September review: 83% of S&P 500 members are more than 10% below their 52 week high, and 42% are more than 20% below.

The parent card rested on one attribution from Citadel: four megacaps added about 300 points in Q3 while the rest subtracted about 150. Breadth data from CNBC, Morgan Stanley, Bloomberg and Nasdaq now says the same thing from four different angles. Most of the market already priced the rate shock. Four companies covered it up. The company this puts the market in matters. The only two prior seven week equal weight losing streaks came in 2002 and 2022, both rate and valuation driven bear markets. Banks leading the decline adds the credit channel: higher long yields squeeze the sector that funds everyone outside the megacaps.