Market rally elevating more investors

Some bull markets only grab a few lucky industries between the horns and leave the rest of investors behind. But this bull is different, and investors are better off for it.

This raging bull market that's been pushing stocks to new highs continues to impress market observers with its breadth, which is another way of saying the market rally includes a broad array of industries. So far, 80% of the sub-industries in the Standard & Poor's 1500 are trading above their average levels over the past 10 weeks, says Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence. That is 20 percentage points better than all the periods since 1995, Stovall says. This statistic is very telling because it shows this bull market isn't just about a single industry or sector, like some other bull markets in the past.

Seeing healthy breadth is important in a bull market since it shows most areas of the market are participating. When a market because overly reliant on monster-sized gains in just a few industries that can foretell problems when the momentum in that one darling sector peters out. Think tech stocks in the early 2000s. "Widening breadth has traditionally been a good thing, not a bad one, for investors," Stovall wrote in a note to clients.

During the past 20 years, when all but 5% of industry group were trading above their 10-week moving averages, the S&P 1500 posted average subsequent price increases of 1.9%, 2.5% and 3.3% in the following three, six and nine weeks, respectively. Those gains during periods of broad industry participation top the average stock price increases during all same three, six and nine-week periods of 0.5%, 0.9% and 1.4%.

Investors don't need to see 95% of stocks above their 10-week moving averages to enjoy benefits of breadth. Stovall found that periods of broad participation in a rally, when 90%, 85% and 80% of industries were trading above their 10-week moving averages, were also bullish. Looks like investors should be glad the market likes just about any stock it can get its hands on, like now.