Key Points

  • Equal Weight vs. Cap Weight S&P 500 is at a Key Level
  • NYSE Advance-Decline Volume is Breaking to New Highs
  • Lack of New Lows is a Bullish Datapoint
  • S&P 500 Breadth Remains “Bent, Not Broken”
  • Short-Term Metrics Need to Improve Further

Chart in Focus:

The S&P 500 Equal Weight Index is at an inflection point relative to the S&P 500 (Cap Weighted). The ratio is fading from the resistance level that we have been highlighting, but the rising 50-day moving average is just below. The moving average has been an important support level for this theme. Much of the “risk-on” behavior that we have seen, since last summer, has coincided with this ratio moving higher. A failure to hold the moving average could be a sign of a more risk averse stance in the equity market.

NYSE Breadth

The Advance/Decline Line for the NYSE is in a steady uptrend above the rising 50-day moving average, tracking the path of the S&P 500. Importantly, the A/D Line is on the verge of trading to a new high. Should a new high be reached, we would expect the index to follow closely behind.

Adding volume to the equation, we can see that the NYSE Advancing – Declining Volume Line is in the process of breaking to a new high, ahead of the S&P 500. The 50-day moving average has done a good job of providing support for the indicator and the index.

Importantly, for our work, we have not seen a sustained buildup of new lows on the NYSE. The percentage of issues on the NYSE making new 52-week lows and the percentage making new six-month lows remain close to the zero level.

The percentage of issues on the NYSE that are trading above their respective 200-day moving averages has been declining since the start of the year but remains above the 60% level. This level points to the fact that a healthy majority of issues are in long-term uptrends. Additionally, this metric appears to be finding support at the 2020 highs.

The percentage of issues on the NYSE which are trading above their respective 50-day moving averages has regained the 50% mark after a brief trip below. Thus far, the series of lower highs since late 2020 has not had a bearish influence on the S&P 500, which has continued to find support at its rising 50-day moving average.

The percentage of issues on the NYSE which are trading above their respective 20-day moving averages is rebounding in the near-term. At the same time, the S&P 500 has regained its own 20-day moving average, which has shifted from rising to flat. The indicator has made a series of lower highs since last November, a trend that bullish investors would like to see broken in the near-term.

S&P 500 Breadth

Breadth within the S&P 500 remains constructive, as we have been highlighting for the past few weeks. The A/D Line continues to trend higher, above the 50-day moving average, while the percentage of stocks in long-term uptrends (above their own 200-day moving averages) has regained the 90% level. The intermediate-term trends are healthy, with more than 70% of stocks above their 50-day moving averages. The short-term has faded a bit, with the percentage of stocks above their 20-day moving averages below the 60% level.


S&P 600 Breadth

Within the S&P 600, the Advance/Decline Line is holding up under pressure, remaining above the 50-day moving average. Across timeframes, the short and intermediate-term metrics are neutral while the long-term metric remains strong.



Our “bent, not broken” view of breadth continues to play out. From a trend perspective, long-term metrics remain healthy/constructive. We would like to see the short-term metrics improve and regain the 60% level. Thus far, we are not seeing a buildup in new 52-week or six-month lows on the NYSE.

Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.