Breadth Data Improves
from Depressed Levels

by | May 26, 2022

Key Points

  • NYSE Advance/Decline Line Leaves a Small Bullish Divergence
  • NYSE New Lows Fall Sharply
  • S&P 500 Metrics Improve Slightly
  • Small Cap and NASDAQ 100 Data Also Ticks Higher
  • The Greatest Improvements Are in the Short-Term Data

NYSE Breadth

The NYSE Advance/Decline line remains in a downtrend but is trying to stabilize in the near term. The indicator is still below the declining 50-day moving average, as is the case for the S&P 500. There is a very small divergence currently in play as Friday’s low for the index was not met with a lower low for the A/D Line. However, there is more work that needs to be done before we can say that breadth is improving.

The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have been declining over the past two weeks. This plays out even as the S&P 500 has made lower lows in that time frame. While this is technically a divergence, it will not be confirmed until the S&P 500 at least breaks its series of lower highs and lower lows.

The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs remains at depressed levels. Both metrics are less than 1%. Given the damage done at the individual stock level, it will likely take time for investors to see an improvement in new highs.

The percentage of NYSE issues trading above their respective 200-day moving averages rose to 20% this week vs. 16% two weeks ago. This metric continues to trade near its lowest levels of the current market decline. At the same time, the S&P 500 is below its 200-day moving average.

The percentage of NYSE issues trading above their respective 50-day moving averages rose to 23% from 10% two weeks ago. The S&P 500 continues to trade below its own 50-day moving average.

The percentage of issues on the NYSE trading above their respective 20-day moving averages has moved to 46% this week from 8% two weeks ago. The S&P 500 is trading below a declining 20-day moving average.

S&P 500 Breadth

Breadth metrics for the S&P 500 have improved over the past two weeks.

  • Advance/Decline Line: Rebounding below the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 29% from 27% two weeks ago.
  • Percent Above Their 50-Day Moving Average: 23% from 14% two weeks ago.
  • Percent Above Their 20-Day Moving Average: 42% from 7% two weeks ago.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index rose over the past two weeks.

  • Advance/Decline Line: Still in a downtrend below the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 21% from 15% two weeks ago.
  • Percent Above Their 50-Day Moving Average: 26% from 11% two weeks ago.
  • Percent Above Their 20-Day Moving Average: 48% from 11% two weeks ago.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 moved higher over the past two weeks. 

  • Advance/Decline Line: Holding below the declining 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 14% from 13% last week.
  • Percent Above Their 50-Day Moving Average: 14% from 7% last week.
  • Percent Above Their 20-Day Moving Average: 36% from 3% last week.

Take-Aways:

Over the past two weeks, we have seen an improvement in the breadth metrics that we track. The advances are the most pronounced in the short-term data, such as the percentage of stocks trading above their respective 20-day moving averages. While these improvements are welcome, we have seen similar dynamics play out as equities have declined. Investors will want to see a stronger response from stock prices to feel confident that breadth improvements will lead to a durable bottom.

Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.