Key Points
- Last-Minute Holiday Shopping in Specialty Retail?
- Have New Lows Peaked on the NYSE?
- Looking for an Improvement in NYSE New Highs
- S&P 500 Metrics Are Mixed with an Upside Bias
- Small Cap Metrics Are Most Improved
Chart in Focus
Last-minute holiday shopping? The S&P 500 Specialty Retail Index presents an interesting setup as it holds the rising 50-day moving average following a pullback from record highs. Price and the 50-day moving average above the rising 100-day moving average. If this remains the case, odds favor a continuation of the uptrend and a move to new highs.
The group is testing price-based and moving average support on a relative basis. This is a logical spot for Retail to resume a leadership position.
NYSE Breadth
The NYSE’s Advance/Decline Line is fighting to regain broken support as it remains below the declining 50-day moving average. This dynamic is in place as the S&P 500 trades near the top of its recent consolidation range and near-record levels. Should the index break to new highs, a divergence will be left in place, giving the breadth bears another datapoint for their case. However, divergences are simply a condition, and the signal would only be triggered if the index breaks below key levels.
The NYSE’s Advance-Declining Volume Line is similar to the Advance/Decline Line, trading below the 50-day moving average and trying hard to hold support. There is also a divergence between the index, which is trading near record levels, and the indicator.
The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have moved lower over the past week. Perhaps more importantly, the recent spike culminated in a lower high than what was seen in late November. A continued trend to the downside as the S&P 500 trades to record levels would be a sign that breadth is improving after being dismal through most of 2021.
While there has been an improvement in the New Lows data, we have not seen an improvement in New Highs yet. The five-day moving averages of stocks on the NYSE, making new six-month and 52-week highs, ticked slightly lower last week. We recognize that it will take time for these metrics to improve, but we want to see this trend moving higher soon.
The percentage of stocks on the NYSE trading above their respective 200-day moving averages moved to 33% this week from 32%. Once again, we want to see more of an improvement in this metric as the S&P 500 trades near record levels. For now, the downtrend of 2021 remains in place for this measure of long-term trends.
The percentage of NYSE issues trading above their respective 50-day moving averages has moved to 31% from 28% last week. Again, we want to see more improvement in this metric as the index trades near record levels, above its 50-day moving average.
The percentage of stocks trading above their respective 20-day moving averages rose to 48% from 32% last week as the S&P 500 regained its 20-day moving average. It is to be expected that the greatest early improvements would be in the short-term metrics. Now we want to see some follow through on this strength that begins to roll into the longer-term metrics.
S&P 500 Breadth
Breadth metrics for the S&P 500 were mixed with an upside bias this week.
- Advance/Decline Line: Rebounding from the rising 50-day moving average, looking for new highs.
- Percent Above Their 200-Day Moving Average: 65% from 66% last week.
- Percent Above Their 50-Day Moving Average: 55% from 53% last week.
- Percent Above Their 20-Day Moving Average: 65%% from 58% last week.
SmallCap Breadth
Breadth metrics for the S&P 600 Small Cap Index have improved over the past week.
- Advance/Decline Line: Holding below the 50-day moving average but not breaking down.
- Percent Above Their 200-Day Moving Average: 46% from 43% last week.
- Percent Above Their 50-Day Moving Average: 41% from 35% two last week.
- Percent Above Their 20-Day Moving Average: 63% from 38% two last week.
Take-Aways:
Breadth metrics saw a small improvement across markets this week, with the best results coming from short-term metrics. The biggest question that we have is, “did new lows on the NYSE peak?” If that is the case, we would expect to see continued improvement in breadth as the new year begins. Perhaps what is most telling is that breadth has been terrible all year, and the major averages did not crack.
There will not be a Note tomorrow. We hope that you enjoy the holidays with your family, friends, and those who mean the most to you! Thank you for taking the time to read our work each day.
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