Over the past few weeks, we have been highlighting that breadth has become incrementally bullish. That trend continues this week as the S&P 500’s Advance/Decline Line makes a higher high and leads the index in moving toward the top of the one-year range. Yesterday marked an 80% upside day for NYSE breadth while volume breadth clocked in above 90%. Finally, today could trigger a bullish signal should the TRIN close below 0.50 as it did yesterday.
The S&P 500 closed above the 4,200 level that we have been highlighting; however, it is the advance/decline line that will be in focus here. The A/D line has made a higher high, breaking the downtrend that has been in place for most of 2022. Additionally, the A/D Line has seen its one-year range position move above 0.80 (the high of the year is 1.00, and the low of the past year is 0.00). At the same time, the one-year range position for the index is below 0.50. The A/D Line is leading to the upside.
NYSE Upside Breadth looks at advancing issues as a percentage of advancing and declining issues. This metric was over 80% yesterday, and we have begun to see a clustering of readings greater than 80% over the past six weeks.
NYSE Volume Breadth is like the Upside Breadth metrics above but incorporates volume. Yesterday gave the bulls a reading above 90%.
The Arms Index or TRIN registered a reading below 0.50 yesterday. This sets the stage for today to be a signal day as back-to-back readings below 0.50 have a history of being a bullish set-up for the S&P 500.
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