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<p>Market breadth has been deteriorating, resulting in a divergence in the Advance-Decline (A-D) Line, which has failed to join the S&amp;P 500 at new highs for the past month.&nbsp; While it’s still early, divergences in the A-D Line have historically preceded market downturns, as a narrowing of participation occurs as investors become increasingly selective.&nbsp; For instance, the most recent divergence in the A-D Line occurred in August 2020, prior to a -9.6% drawdown in the S&amp;P 500 (see lines on graph below).&nbsp; As such, this emerging warning flag will remain near the top of our watchlist in the weeks ahead.</p>
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