To market veterans, talk of a stock-market “bottom” after a mere 3% pullback might sound odd, but that’s the sort of world investors live in right now, says one chart watcher.

While stocks have climbed in 2021, hitting new highs as recently as last week, fewer and fewer individual stocks have participated in the move, said technical analyst Andrew Adams in a Wednesday note for Saut Strategy. That narrowing breadth is what’s now sending a bottoming signal, though indexes haven’t suffered steep falls.

Stocks got smacked hard on Monday, accelerating a selloff that began late last week and left the S&P 500
SPX,
+0.16%

down 2.9% from its July 12 record close. The Dow Jones Industrial Average
DJIA,
+0.04%

on Monday suffered its biggest one-day drop since October. The S&P 500, Dow and Nasdaq Composite
COMP,
+0.04%

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