Research & Advice

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Bad Movie Night

Ever have a designated “Bad Movie Night” with your friends? It’s been a while for me. One day per month, a member of the group would go to Blockbuster and find the absolute worst movie they could find. Overacting, campy plots, special effects with a budget that matched my third-grade allowance—think “Sharknado,” “Roadhouse” or “Plan 9 From Outer Space.” These movies were so bad, they were good. They were examples of “good bad” as opposed to “bad bad.”

The last few months have been bad for the stock market. Investors have been liquidating their securities in anticipation that the bad will get worse. However, breadth of the young, two-week rally suggests that it was so bad it’s good. Tracking market breadth is a technique used to gauge the direction of the overall market. It involves comparing the ratio of advancing stocks versus declining stocks in terms of both price and volume. When a certain percentage of prices and volume move in the same direction, say 90 percent, then it’s referred to as a 90 percent up day or 90 percent down day.

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