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Take-Aways:

Breadth metrics improved again this week. While there is still a lot of work to do before we can make the case that breadth is bullish, these improvements are playing out as the S&P 500 nears the key 3,900 level that we have been highlighting. If the countertrend rally is going to morph into something more sustainable, we want to see these metrics continue to improve as the index moves through important resistance points.  

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NYSE Breadth

The NYSE Advance/Decline Line remains in a downtrend, below the 50-day moving average but appears to have found some support at the pre-COVID highs. This is a logical spot for a reversal to begin. The S&P 500 has rallied to its 50-day moving average, just under the key 3,900 level that we have been highlighting in our work.

The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have moved lower again this week, after making a lower high during the most recent move to cycle lows for the S&P 500. This is a divergence that continues to have our close attention. 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. Breaking above the August peaks would be a sign of further improvement.

The percentage of NYSE issues trading above their respective 200-day moving averages moved to 21% this week from 17% last week and remains in a downtrend. The S&P 500 remained 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 35% from 21% last week. The S&P 500 is testing its 50-day moving average from below.

The percentage of issues on the NYSE trading above their respective 20-day moving averages stands at 64%, up from 44% last week. The index is above its 20-day moving average, which is beginning to turn higher. Note that this metric has acted more as an overbought/oversold signal this year, with readings in the 75-80% range signaling overbought conditions. Should that pattern hold, there is room to overbought levels.

S&P 500 Breadth

Breadth metrics for the S&P 500 improved on the week.

  • Advance/Decline Line: Below the 50-day moving average, moving higher.
  • Percent Above Their 200-Day Moving Average: 29% from 19% last week.
  • Percent Above Their 50-Day Moving Average: 49% from 21% last week.
  • Percent Above Their 20-Day Moving Average: 83% from 57% last week.

Small Cap Breadth

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

  • Advance/Decline Line: Testing the 50-day moving average from below.
  • Percent Above Their 200-Day Moving Average: 35% from 26% last week.
  • Percent Above Their 50-Day Moving Average: 56% from 28% last week.
  • Percent Above Their 20-Day Moving Average: 85% from 65% last week.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 were stronger this week. 

  • Advance/Decline Line: Below the 50-day moving average, trying to rally.
  • Percent Above Their 200-Day Moving Average: 23%, from 15% last week.
  • Percent Above Their 50-Day Moving Average: 40% from 17% last week.
  • Percent Above Their 20-Day Moving Average: 76% from 42% last week.

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