Key Points
- NYSE A/D Line Breaks Support
- NYSE New Lows Spike Further this Week
- NYSE New Highs Continue to Decline
- S&P 500 Breadth Weakens
- Small Cap A/D Line Makes a Lower Low
NYSE Breadth
The NYSE’s Advance/Decline Line has broken support and has made a lower low this week, below the declining 50-day moving average. The S&P 500 has also broken support at 4,500, below the moving average, opening the door to a move to 4,200 on a closing basis. Note that the area near 4,200 was tested on Monday, establishing a level that can be used to manage risk in the near term. Retaking the 4,500 level would go a long way toward repairing the damage that has been done technically.
The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have spiked further to the upside this week. On Monday, these metrics registered their highest readings since the pandemic selloff in March 2020. They have eased over the past two days, setting the potential that a near-term bottom has been established for the S&P 500 near the 4,200 level on an intraday basis.
Heading into the most recent bout of selling pressure, our biggest concern from a breadth perspective was a lack of new highs. The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs continues to move lower, with both now at less than 1%.
The percentage of stocks on the NYSE trading above their respective 200-day moving averages moved to 22% this week from 30%. The trend here has been and remains to the downside. The S&P 500 has moved below its 200-day moving average for the first time since May 2020.
The percentage of NYSE issues trading above their respective 50-day moving averages has moved to 19% from 30% last week. This metric remains in the downtrend that has been in place for more than a year. The S&P 500 is below its 50-day moving average.
The percentage of stocks trading above their respective 20-day moving averages moved to 13% from 28% last week as the S&P 500 remains below its 20-day moving average.
S&P 500 Breadth
Breadth metrics for the S&P 500 were weaker over the past week.
- Advance/Decline Line: Breaks below the 50-day moving average.
- Percent Above Their 200-Day Moving Average: 42% from 57% last week.
- Percent Above Their 50-Day Moving Average: 29% from 44% last week.
- Percent Above Their 20-Day Moving Average: 10% from 30% last week.
SmallCap Breadth
Breadth metrics for the S&P 600 Small Cap Index also weakened over the past week.
- Advance/Decline Line: Below the 50-day moving average, makes a lower low.
- Percent Above Their 200-Day Moving Average: 31% from 42% last week.
- Percent Above Their 50-Day Moving Average: 20% from 31% last week.
- Percent Above Their 20-Day Moving Average: 10% from 24% two last week.
Take-Aways:
Perhaps the only positive thing that we can say about breadth is that it is so bad that it could be good. Some metrics are at/near “washed out” levels that have the potential to lead to a near-term bounce. Regardless, Monday’s low in the S&P 500, near 4,200, can serve as a reference point for managing risk.
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.