Key Points
- NYSE A/D Line Remains in a Downtrend and Made a New Low this Week
- New Lows on the NYSE Stay Elevated
- S&P 500 A/D Line Makes a New Low
- Small Cap Breadth Has More Work to Do
- NASDAQ 100 Metrics are Still Under Pressure
NYSE Breadth
Despite a two-day rally in equity markets, the NYSE Advance/Decline line remains in a downtrend below the declining 50-day moving average. In fact, the A/D line made a new low in the current downtrend on Monday, and we must wonder if this will lead to the S&P 500 breaking below the key 4,200 level as it trades below its 50-day moving average.
The five-day moving averages of issues on the NYSE making new 52-week and six-month lows remain stubbornly elevated. The 52-week metric is pushing toward levels seen in late January, while the six-month metrics stand at more than 10%. Bulls want to see these moving averages begin to decline to have confidence that the S&P 500 will hold support.
While new lows remain elevated, the five-day moving averages of stocks on the NYSE making new six-month and 52-week highs are still under pressure. Even with the strong rally in the market yesterday, new highs were barely able to breach the moving averages.
As the S&P 500 trades below its 200-day moving average, the percentage of individual names on the NYSE trading above their respective measures of long-term trend stands at 26%. This metric has been falling for more than a year, a trend that bulls want to see reversed.
The percentage of NYSE issues trading above their respective 50-day moving averages rose to 31% from 27% 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 rose on the week, moving from 38% to 45% but continues to make lower highs since the start of the year. The S&P 500 did close above its 20-day moving average after yesterday’s move to the upside.
S&P 500 Breadth
Breadth metrics for the S&P 500 have improved on the week but still have a lot of work to do.
- Advance/Decline Line: Holding below the 50-day moving average, made a lower low this week.
- Percent Above Their 200-Day Moving Average: 42% from 37% last week.
- Percent Above Their 50-Day Moving Average: 40% from 27% last week.
- Percent Above Their 20-Day Moving Average: 66% from 37% last week.
Small Cap Breadth
Breadth metrics for the S&P 600 Small Cap Index rose on the week.
- Advance/Decline Line: Below the 50-day moving average.
- Percent Above Their 200-Day Moving Average: 41% from 37% last week.
- Percent Above Their 50-Day Moving Average: 46% from 36% last week.
- Percent Above Their 20-Day Moving Average: 63% from 44% last week.
NASDAQ 100 Breadth
Breadth metrics for the NASDAQ 100 improved over the past week.
- Advance/Decline Line: Below the 50-day moving average, made a new low this week.
- Percent Above Their 200-Day Moving Average: 27% from 23% last week.
- Percent Above Their 50-Day Moving Average: 30% from 17% last week.
- Percent Above Their 20-Day Moving Average: 62% from 34% last week.
Take-Aways:
The good news is that the breadth metrics improved this week for the major U.S. averages. However, a persistent theme this year has been an inability to build on these improvements when they have taken place. Trend metrics remain under pressure, and most A/D lines made new lows this week. Bulls want to see a steady improvement in participation to have confidence that these averages will hold key support levels, which has not been the case in 2022.
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