Key Points

  • NYSE A/D Line Remains in a Downtrend
  • New Lows on the NYSE Are Elevated
  • NYSE New Highs Fade from Resistance
  • S&P 500 Breadth Turns Lower Again
  • Small Cap Breadth Weakens

NYSE Breadth

The Advance/Decline line for the NYSE remains in a pattern of lower lows and lower highs below a declining 50-day moving average. This is a textbook definition of a downtrend. This downtrend in the A/D Line confirms the downtrend on the S&P 500, which trades below its 50-day moving average.

There has been no reprieve for the five-day moving averages of issues on the NYSE, making new 52-week and six-month lows. The moving average and the data remain stubbornly high since spiking at the start of 2022. It is hard to make the case that the bears are losing control of the trend until these metrics begin to decline.

The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs have turned lower this week after failing to surpass the levels seen in December/January. For months, we have been arguing that the lack of new highs was one of the breadth data points that gives us pause. There is nothing in the recent data to change this view.

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. This metric has moved lower over the past week, from 26% to 24%.

The percentage of NYSE issues trading above their respective 50-day moving averages fell to 27% from 30% last week as 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 declined on the week, moving from 46% to 38% as it continues to make lower highs since the start of the year. 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 declined over the past week.

  • Advance/Decline Line: Holding below the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 37% from 44% last week.
  • Percent Above Their 50-Day Moving Average: 27% from 35% last week.
  • Percent Above Their 20-Day Moving Average: 37% from 42% last week.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index also fell on the week.

  • Advance/Decline Line: Below the 50-day moving average, still making lower lows.
  • Percent Above Their 200-Day Moving Average: 37% from 42% last week.
  • Percent Above Their 50-Day Moving Average: 36% from 42% last week.
  • Percent Above Their 20-Day Moving Average: 44% from 60% last week.

Take-Aways:

Since the start of the year, improvements in breadth have been short-lived. This week is another case of the metrics moving lower after the previous week’s improvement. When all is said and done, the abysmal breadth dynamics that were in play for much of 2021 remain in play during 2022. With the major averages now breaking below key support levels, it is hard to make a bullish case on U.S. equities.

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.