Last week, we highlighted improvements in the breadth picture for the market. This week, we explore some developments in the S&P 500 which have caught our attention. The index closed above 4,000 yesterday and is now in a short-term uptrend. The Advance/Decline Line has broken above short-term resistance as new lows have trended lower. Finally, the percentage of stocks more than 10% and 20% off their highs have been moving to the downside. This sets the stage for an incrementally bullish environment.
S&P 500
The S&P 500 pushed through an important level yesterday, closing above the 4,000-mark. This gives a higher high and a higher low since a bottom was made on June 17th. This provides an opportunity to become incrementally bullish above the 4,000 level while managing risk on the move below 3,800.
Advance/Decline Line
As the S&P 500 pushes through the important 4,000 level, we also note that the Advance/Decline line for the index has made a higher high. The A/D Line has moved up and through the interim June/July peaks after making a slightly higher low on July 14th.
New Lows
New Lows have been trending to the downside since peaking in June. The 10-day moving averages of S&P 500 stocks making new six-month and 52-week lows are both below 3%.
Stocks in Correction or Bear Market
The percentage of stocks in the S&P 500 that are trading more than 10% and 20% off their highs have been declining since the June peak.
*Due to travel plans, we will publish on a modified schedule next week.
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