It’s quite easy to get carried away with the drawing of conclusions based on a few technical chart patterns (and we are not doing that here!), but this chart is just too ugly to at least go unmentioned. What we’re looking at is the percent of stocks in our own Gavekal Capital International DM Americas Index that are at least 10% off of their 200-day high. A stunning 55% of DM Americas stocks are at least 10% from their 200-day high while the DM Americas Index is hovering just below its all time high. More interesting than the absolute number of stocks trading lower than 10% from their high (blue line) is the quite significant and growing divergence from the index level (red line). Specifically, this tells us that there has been a marked deterioration in market breadth that is about two years in the making. Needless to say, this is not good. Usually we like markets in which most stocks are participating in upward price movements.