- Energy Equipment & Services are an Emerging Leader
- Breadth Metrics Improve Across the NYSE, S&P 500, and S&P 600
- Advance/Decline Data Points to Further Upside for the Index
- Short-Term Breadth Improves, Breaks their Downtrends
- Long-Term Breadth Remains Strong
Chart in Focus:
While much has been made of the “run in commodities”, some areas which are leveraged to the commodity complex may just be getting started in bullish trends. The S&P 500 Energy Equipment & Services Index is trading above its rising 50-day moving average and is in the process of breaking above price-based resistance (now support?). On a relative basis, there is a slow reversal taking shape as the group moves from being a long-time laggard to the early stages of leadership.
Last week we highlighted that the NYSE Advance/Decline Line was on the verge of making a new high. This week we can see that a new high has been achieved. Odds favor the S&P 500 following the A/D Line and making a new high of its own. Both the indicator and the index remain in uptrends, above the rising 50-day moving averages.
When looking at NYSE Advancing – Declining Volume, we can see a level of confirmation, as this indicator is also at record highs and above the 50-day moving average.
Both 52-week and 6-month lows remain pinned to the bottom of the chart for now.
The percentage of issues on the NYSE that are trading above their respective 200-day moving averages remains above the 60% mark after holding the support level that we highlighted last week. A “healthy majority” are trading in long-term uptrends.
The percentage of issues trading above their respective 50-day moving averages has also regained the 60% level. Perhaps more importantly, the series of lower highs, which has been in place since December, has been broken.
The percentage of stocks above their respective 20-day moving averages has moved above 70% this week as the index holds above its own 20-day moving average. Here too, the series of lower highs has been broken.
S&P 500 Breadth
Breadth for the S&P 500 has improved on the week as well. The Advance/Decline has traded to a new high. Across time frames, breadth metrics indicate that a “healthy majority” of stocks are in uptrends.
S&P 600 Breadth
In the Small Cap universe, the dynamics mentioned above repeat. The Advance/Decline Line traded to a new high this week. The percentage of stocks above their respective 200, 50, and 20-day moving averages are all above the 60% threshold.
Across different indices and different timeframes, breadth metrics have improved. New highs for the Advance/Decline data points to the likelihood of new highs for the S&P 500 as well.