The Nasdaq Composite has looked shaky since notching a record close on June 2, and a closer look at market internals suggests the weakness runs deeper than the headline index implies.
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The Nasdaq New High/New Low (NH/NL) Index, a popular gauge of how many stocks are hitting fresh highs versus lows, ended Monday at 40.6%, its weakest reading since April 10. This isn't a sudden shift — the warning signs have been building for months.
After the Nasdaq bottomed on March 30, the NH/NL Index rallied into late April. But when the Composite pushed on to new record highs, the breadth measure couldn't keep pace, posting a lower high instead. That mismatch, known as a divergence, hinted that fewer and fewer stocks were actually participating in the rally, even as the headline index kept climbing.
Now that the NH/NL Index is mired near three-month lows, that narrowing looks to be spreading into an outright decline, leaving the Nasdaq resting on a thinner foundation of support.
Context matters here: during pullbacks in late 2025, the indicator bottomed between 29.7% and 35.0%, while March 2026's low was a much deeper 17.6%. Historically, sharp "V-bottom" reversals in this indicator have often marked significant lows for the Nasdaq. Bulls are watching for the NH/NL Index to climb back above its declining 10-day moving average, at 53.4% on Monday, as a sign the selling pressure is easing.
What the chart shows:
(Daily markets commentary from Reuters analysts on the signals financial charts are sending — and what they might mean.)
