On 10/02/26 Nasdaq Composite and its sub index Nasdaq 100 – made new all – time highs. How are these bullish leaders performing underneath the surface of price action? The answer is shocking.
Two of the main internal stock market momentum indicators are Advance/Decline lines (A/D) and New 52 – week Highs and Lows.
The Nasdaq Composite – daily cumulative A/D line ($NAAD) courtesy of StockCharts.com illustrates its action over the prior two years.
Nasdaq A/D line has gone below its March 2026 low and is close to going below its April 2025 bottom! Even more shocking, both the S&P 500 – A/D line and NYSE – A/D line have so far only retraced about 80% of their respective post March 2026 rallies. This implies the Nasdaq rally is being led by a very small number of stocks.
The Nasdaq Composite daily – 52 – week new highs chart courtesy of Barchart.com tells us precisely the number of stocks leading the rally.
There are approximately 3,300 stocks composing the Nasdaq Composite. On 10/02/26 only 42 stocks made 52 – week highs! Diversification is supposed to be the key to stock investing. If you have a diversified stock portfolio you are probably underperforming the broader U.S. stock market by a wide margin.
The next chart from StockCharts.com shows the Nasdaq 100 – Bullish Percent Index ($BPNDX).
The Bullish Percent Index (BPI) is a breadth indicator based on the number of stocks on Point & Figure Buy Signals within an index. It helps you understand the internal health of an index by looking at the number of components that are on a bullish or bearish track.
BPI is not a precise timing tool. For stock market peaks bearish divergences could span over one year or more. For stock market bottoms strong moves up from a bottom are a broad indication of a bull market. Please note the $BPNDX action after the April 2025 bottom. $BPNDX peaked in May 2025 yet Nasdaq 100 – continued to rally for several months.
A bullish case could be for the current $BPNDX action. Note the move up in mid -September 2026. The S&P 500 Bullish Percent Index ($BPSPX) did not have a move up in mid – September.
We always need to analyze the weight of the evidence. There’s very bearish evidence from A/D lines and 52 – week highs. Marginally bullish evidence from the Nasdaq 100 – Bullish Percent Index.
There’s a good chance for a broad-based U.S. stock market decline.
