Communication Services Needs a Breadth Mint

Before closing the doors for the long weekend, on Thursday we published an extended version of our Sector Snapshot with commentary on each of the eleven S&P 500 sectors. Home to mega-caps like Alphabet (GOOGL) and Meta Platforms (META), the Communication Services sector has been an underperformer of late.

The sector is by far the worst performer today as it currently trades down 2% as of this writing, with shares of Alphabet (GOOGL) a major drag; the stock is down mid-single digits for its worst day of the past year following headlines that some of the company’s high-profile AI talent will be leaving the company.

Due to the weakness, Communication Services is now “extremely oversold” (2+ standard deviations below its 50-DMA).  While it has been a drag, not all of the weakness has been due to mega-caps. As shown by the sector’s 10-day advance/decline line below, breadth has been weak, and that’s been the case for some time now.

In fact, and as we first highlighted in last week’s Sector Snapshot, the sector has now seen a negative reading in its 10-day A/D line for 37 straight sessions through today.  That is now the longest streak of negative readings in over 24 years, surpassing two that lasted 36 days in 2007 and 2012.

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