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Take-Aways:

The S&P 500 traded to the key 3,900 level that we have been highlighting before fading over the past few days. Despite the sharp move lower yesterday, breadth metrics have not seen a sharp deterioration. While this is an encouraging development, we need to see continued progress in these metrics to have confidence that the countertrend rally can break and hold above 3,900.

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NYSE Breadth

The NYSE Advance/Decline Line has crossed above the 50-day moving average and remains there despite a sharp selloff in yesterday’s trading. Continued improvement is needed from the A/D Line if the S&P 500 is going to be able to break above the 3,900 level that we have been highlighting. The index is wrestling with its 50-day moving average after a strong rally in October.

The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have moved lower again this week. We want to see these metrics maintain a downtrend as the index moves through 3,900.

The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs have moved higher again this week. Recent strength in these metrics has taken them above the August peaks, a sign of continued improvement.

The percentage of NYSE issues trading above their respective 200-day moving averages moved to 23% this week from 21% last week and remains in a downtrend. The S&P 500 remains below its 200-day moving average. This metric will take time to reverse.

The percentage of NYSE issues trading above their respective 50-day moving averages moved to 38% from 35% last week. The S&P 500 is fighting with its 50-day moving average after fading from the 3,900 level that we have been highlighting.

The percentage of issues on the NYSE trading above their respective 20-day moving averages stands at 60%, down from 64% last week. The index is above its 20-day moving average, which is beginning to turn higher.

S&P 500 Breadth

Breadth metrics for the S&P 500 were mixed over the past week.

  • Advance/Decline Line: Testing the 50-day moving average from below.
  • Percent Above Their 200-Day Moving Average: 32% from 29% last week.
  • Percent Above Their 50-Day Moving Average: 49% from 49% last week.
  • Percent Above Their 20-Day Moving Average: 73% from 83% last week.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index were mostly stronger this week.

  • Advance/Decline Line: Above the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 37% from 35% last week.
  • Percent Above Their 50-Day Moving Average: 60% from 56% last week.
  • Percent Above Their 20-Day Moving Average: 71% from 85% last week.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 were mostly weaker over the past week. 

  • Advance/Decline Line: Below the 50-day moving average after a brief test.
  • Percent Above Their 200-Day Moving Average: 24%, from 23% last week.
  • Percent Above Their 50-Day Moving Average: 35% from 40% last week.
  • Percent Above Their 20-Day Moving Average: 54% from 76% last week.

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