As U.S. equity markets continue to forge new highs, we take a look at our strong and weak close indicators to gauge investors’ conviction levels in the latest moves. The strong close indicator is calculated by recording the cumulative number of days over the last 130 trading days (26 weeks) that the index has closed within 25% of the high for the day. The weak close indicator represents the cumulative number of days over the last 130 trading days (26 weeks) that stocks have closed within 25% of the low for the day.
Going back 20 years, we find that the strong close indicator for the S&P 500 (red line) is currently near the middle of its long-term range, having declined from a high of 57 in August.
Conversely, the weak close indicator shows a recent spike in the number of weak closes (note that the axis in the left is inverted) compared to the multi-year lows it reached in September.
