This chart shows the McClellan Summation Index, a popular market breadth indicator that maps the number of advancing and declining stocks in a given market. Technical analysts consider it a useful indicator of the overall "health" of the market and the market's current trend.

Our latest update features a three-year snapshot (weekly data) showing the ocillation between the number of advancing and declining stocks on the New York Stock Exchange. The summation index reached a high in November of 2006 and has generally eroded since that time.

Above the McClellan Summation Index is a line showing S&P 500 Index performance over the same period.

The chart below highlights a disturbing divergence between the S&P 500, which has been trending upward, and the $NYSI, which has sharply declined.

What this tells us is that the market breadth is shrinking. New highs are being set on the backs of fewer and fewer stocks. This pattern frequently occurs near market peaks, just before a significant decline.

I gratefully acknowlege Stockcharts.com as the source for this chart.