The Hidden Risk of Using Only the S&P 500 for Portfolio Construction
Why IMGELD relies on the full NYSE universe — nearly 3,000 stocks, more volatility, and better long-short opportunities.
At IMGELD, we start from a trader’s perspective: the more stocks we follow, the more opportunities we find. Professional traders seek controlled volatility — enough movement to create setups, but not the kind of chaos that makes risk impossible to manage. Limiting ourselves to only 500 companies would reduce both the number of candidates and the chance of capturing those moves.
This is why our market breadth analysis (our daily post will launch shortly) is based on the entire New York Stock Exchange (NYSE) universe of nearly 3,000 companies. It gives us a far broader and more reliable measure of what the market is actually doing.
Why the NYSE Universe
The NYSE covers every sector and market capitalization, from global leaders to smaller firms.
Breadth indicators such as the McClellan Summation Index (NYSI), Advance-Decline Line (NYAD), New Highs (NYHGH), and New Lows (NYLOW) are all calculated across this full universe, not the S&P 500.
Using this wider base allows us to propose candidates for both longs and shorts from the same dataset that defines our market bias.
Why Not just the S&P 500
The S&P 500 is widely quoted, but it is too narrow for a professional approach to trade idea generation. With only 500 large companies, the index can be distorted by just a handful of mega-caps.
Also, traders seek volatility. Without volatility, there are no gains. Volatility tends to be higher across the full NYSE stock universe than within the S&P 500, which is another reason we focus on it.
The IMGELD Advantage
By anchoring our work in the NYSE universe, IMGELD ensures that:
Long and short candidates are selected from the widest possible opportunity set.
Market breadth reflects the total market, not just a fraction.
Volatility is captured at the right level, supporting the setups that professional traders depend on.