Breadth Turns Lower,
Ending a Three-Week Streak

by | Apr 7, 2022

Key Points

  • New Lows on the NYSE Turn Higher
  • NYSE New Highs Fail to Breakout
  • S&P 500 Metrics Decline on the Week
  • Small Cap Breadth Sustains the Most Damage
  • NASDAQ 100 Data Was Not Immune

NYSE Breadth

The NYSE Advance/Decline line has moved below the 50-day moving average while the S&P 500 holds above its moving average. It is interesting to note that while the S&P 500 traded above its interim February peaks recently, the A/D line did not. This keeps the series of lower highs and lower lows for the A/D line in place, a dynamic that equity bulls want to see alleviated to have confidence that the rally from the March lows will continue.

The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have turned higher this week, and the actual percentage of new lows has been higher over the past two days. Equity bulls want to see these metrics continue to trend to the downside.

The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs have stalled over the past week, unable to surpass the prior 2022 peaks.

After staging a move higher over the prior three weeks, the percentage of NYSE issues trading above their respective 200-day moving averages has moved lower this week. The metric declined from 32% to 28% and remained below the levels that would give bulls confidence that the recent rally could continue.

The percentage of NYSE issues trading above their respective 50-day moving averages fell to 41% from 50% last week. This metric remains below the levels that would signal a healthy majority of issues are in intermediate-term uptrends.

The percentage of NYSE issues trading above their respective 20-day moving averages saw a big reversal this week, moving from 71% to 45%. The S&P 500 remains above its 20-day moving average, and that moving average is trending higher.

S&P 500 Breadth

Breadth metrics for the S&P 500 have improved for a third consecutive week.

  • Advance/Decline Line: Turns lower but holding above the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 47% from 56% last week.
  • Percent Above Their 50-Day Moving Average: 54% from 68% last week.
  • Percent Above Their 20-Day Moving Average: 53% from 88% last week.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index turned lower on the week.

  • Advance/Decline Line: Below the 50-day moving average, near one-year lows.
  • Percent Above Their 200-Day Moving Average: 33% from 42% last week.
  • Percent Above Their 50-Day Moving Average: 35% from 52% last week.
  • Percent Above Their 20-Day Moving Average: 30% from 63% last week.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 turned down on the week.

  • Advance/Decline Line: Turns down above the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 35% from 45% last week.
  • Percent Above Their 50-Day Moving Average: 49% from 69% last week.
  • Percent Above Their 20-Day Moving Average: 56% from 97% last week.

Take-Aways:

In our daily note yesterday, we highlighted that it was becoming harder to make the bullish case. The declines in the breadth data over the past week support this view. While most of the metrics in this note have weakened, the declines are most pronounced in the short-term data (percentage above 20-day moving average) and in the Small Cap index.

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