9-30-26 Market Breadth Sends a Warning | Before the Bell

0:00Historically speaking, what Brett tells you during the decline is that as Brett this week, and he markets tend to be weak, which we've seen that. Now markets haven't deteriorated at the market cap level, but I showed you earlier this week, small caps mid caps, utilities, real estate, financials have all been under tremendous pressure. So underneath the surface of this market cap index has been a lot of destruction in terms of prices. And speaking of that, here's what you need to know before the bell. So markets have been consolidating now. I'll get them to do just, you know, every day, same story. Market's not going away. We had a nice little rally back above the moving averages have come back down to that. Now, Brett of the market is very weak, right? So the numbers of stocks trading above their 50 and moving average has fallen very sharply. We're down to like 40% of stocks trading above their 50 and moving average right now. So at the very low level, historically speaking,

1:00and we talked about this before, what Brett tells you during the decline is that as Brett this week, and he markets tend to be weak, which we've seen that now markets haven't deteriorated at the market cap level, but I showed you earlier this week, small caps mid caps, utilities, real estate, financials have all been under tremendous pressure. So underneath the surface of this market cap index has been a lot of destruction in terms of prices. And that's not surprising. And we see that the number of stocks trading above their, their fit respect to 50 and 200 day moving averages, the numbers of stocks on the New York Stock Exchange hitting 52 week lows spike to a record high. Now, interestingly enough, during the decline of that data, right? So as the number of 52 week lows is rising, and as the number of stocks falling below the 50 and moving average is, is increasing. That's typically the, that's typically what's happened during a correction or a consolidation, which is exactly what we've seen. However,

2:01now that we're getting to those more extreme lower levels, those tend to be a bit of an inverse kind of a contrarian indicator, right? We're getting washed out in these markets. As we start to move into the fourth quarter, and this is going to be the subject of this weekend's bull bear report, there's, there's a few things here that certainly support markets going there. Earnings are still very, very positive at the moment. 2026 earnings estimates are still rising. Corporate buybacks returns starting next month. As soon as we get in October, we're going to start seeing corporate buybacks come back in as earnings are announced. And, you know, and more importantly, there's still a lot of liquidity in the overall markets. Those are, that's kind of a decent setup for a year in rally. Doesn't mean we're, now again, we're not going to necessarily get that, but it's a decent setup for that. And again, with this kind of this ongoing consolidation, we wrung out, as I said, not necessarily in the market cap index, and it's very unusual to see the types of data that we're seeing, 52 week lows, those type of things,

3:02when a market that hasn't corrected, it's only consolidated. But again, below that surface, once you get, you know, into the equated indexes and, and down, you do start to really see the pickup and destruction that's occurred. And there's, so there's, there, the market is setting up. Cinemates getting much more negative. Be a little bit cautious here about being overly risk averse, particularly moving into this last quarter of the year. There is getting to be a setup here for a bit of a rally. And markets tend to do exactly what you expect them not to do. And that's just kind of like my wife. Just, you know, kind of, she never listens to me. Does it matter what I say? And then when, whenever she does messes up, and I say, I can't say I told you so, right? You just, yes, exactly. Yes, dear. That's, that's all there is to it. Anyway, that's what she did before the mountain's water.