Key Points
- NYSE A/D Line Remains in a Downtrend
- New Lows on the NYSE Spiked Last Week
- NYSE New Highs Show Signs of Life
- S&P 500 Breadth Improved on the Week
- Small Cap Breadth Gets Better, Bulls Need to See This Continue
NYSE Breadth
The Advance/Decline line for the NYSE remains in a downtrend, below the declining 50-day moving average. The S&P 500 is fighting to hold support in the 4,200 – 4,300 zone, below its 50-day moving average. To have confidence that support will continue to hold, investors will want to see the A/D Line begin to improve.
Like last week, the five-day moving averages of issues on the NYSE making new 52-week and six-month lows moved slightly lower. Last Thursday saw a big spike in these metrics as stocks came under pressure. Bulls want to see new lows trending lower, something that has been elusive for the past few weeks.
The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs have moved higher over the past week. The moving averages have been trending lower for more than a year. Breaking above the early 2022 highs would be a sign of improvement under the market’s surface.
As the S&P 500 remains below its 200-day moving average, the percentage of NYSE issues trading above their respective 200-day moving averages remains in a downtrend. However, there was a slight improvement in this week’s reading of 26% vs. 21% last week.
The percentage of NYSE issues trading above their respective 50-day moving averages rose to 30% from 20% last week. Despite this improvement, the trend remains to the downside. At the same time, the S&P 500 continues to trade below its 50-day moving average.
The percentage of NYSE issues trading above their respective 20-day moving averages improved on the week, moving from 22% to 46%. This metric has been improving during the opening months of 2022 but has still been registering lower highs. The S&P 500 remains below its 20-day moving average as well.
S&P 500 Breadth
Breadth metrics for the S&P 500 have improved over the past week but still have a lot of work to do.
- Advance/Decline Line: Holding below the 50-day moving average.
- Percent Above Their 200-Day Moving Average: 44% from 34% last week.
- Percent Above Their 50-Day Moving Average: 35% from 25% last week.
- Percent Above Their 20-Day Moving Average: 42% from 17% last week.
Small Cap Breadth
Breadth metrics for the S&P 600 Small Cap Index also improved on the week.
- Advance/Decline Line: Below the 50-day moving average, still making lower lows.
- Percent Above Their 200-Day Moving Average: 42% from 32% last week.
- Percent Above Their 50-Day Moving Average: 42% from 23% last week.
- Percent Above Their 20-Day Moving Average: 60% from 28% last week.
Take-Aways:
The breadth metrics that we track have improved on the week. We have seen bouts of improvement at various points over the past few months, but they have proven to be short-lived. Until there is evidence that higher levels can be maintained, the breadth picture will likely remain challenging. One bright spot is the slight increase in new highs on the NYSE.
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