Nasdaq 100: Market breadth improves despite October losses

The Nasdaq 100 has fallen 3.3% in October through 29 October, reaching 29,403 points. That leaves the technology-heavy index approximately 5.8% below its record high of 31,225 points, set on 6 October. Its year-to-date gain remains at 16.4%.

Beneath the surface, the picture is more encouraging: 57 of the 101 stocks analysed, approximately 56%, are higher for the month. The median constituent return stands at +3.3%. The index’s monthly decline therefore masks a recovery across many of its members.

Positive divergence explained: A positive divergence occurs here when the index falls while market breadth improves. It can suggest that selling pressure is easing across the wider market, but does not independently confirm an index recovery.

Nasdaq 100 market breadth: 63% above the 200-day average

In September, the Nasdaq 100 gained 3.2%, even as the number of stocks above their own 200-day moving average fell from 67 to 53. Fewer constituents were supporting the rally.

October has reversed that relationship. By 29 October, 62 of the 99 stocks covered by the 200-day analysis were above that average — approximately 63%, up from 54% at the end of September. That is one more stock than on the record day, despite the index trading substantially lower.

According to our market breadth analysis, a positive divergence between the index and constituent participation has been present since 27 October.

Nasdaq 100 with its 200-day moving average, constituent participation above the 200-day and 50-day averages, and the cumulative advance/decline line. 

Alphabet, Meta and Nvidia weigh on the Nasdaq 100

Heavyweight stocks account for much of the index’s weakness.Alphabet Inc - C (24 Hours) has fallen 17.5%, Meta Platforms Inc (24 Hours) 13.9%, Netflix Inc (24 Hours) 10.8% and NVIDIA Corp (24 Hours) 6.4% in October so far.

AI infrastructure stocks have also suffered substantial losses, with Coreweave Inc (24 Hours) down 30.3% and Nebius Group NV (24 Hours) down 27.1%. Sharp declines in individual stocks have pushed the simple average constituent return to −0.1%, even as the median remains firmly positive.

A similar pattern is visible in S&P 500 market breadth, where heavyweight stocks are also holding back a broader recovery. Read more in “S&P 500: Market breadth rebounds as heavyweights struggle”.

Advance/decline line: Recovery awaits confirmation

The cumulative daily balance of advancing stocks minus declining stocks has turned from −131 in September to +125 in October so far. The advance/decline line has consequently recovered, but remains below its mid-August peak.

The short-term picture is balanced: 52 of 101 stocks, approximately 51%, trade above their 50-day moving average. During October, 21 constituents recorded new 52-week highs, compared with ten reaching new lows.

So far, the data suggest that heavyweight weakness is driving much of the index’s decline. A convincing trend reversal would also require index prices to recover and the advance/decline line to confirm the improvement.