The Breadth Picture Continues
to Improve

by | Jun 2, 2022

Key Points

  • NYSE Advance/Decline Rebounds to the 50-Day Moving Average
  • NYSE New Lows Fall Sharply, Again
  • S&P 500 Metrics Improve for the Third Week 
  • Small Cap and NASDAQ 100 Data Also Gets Better
  • The Greatest Improvements Remain in the Short-Term Data

NYSE Breadth

The NYSE Advance/Decline line has rallied to the underside of the declining 50-day moving average. Technically, the trend is still down, and we note that the S&P 500 is also below a declining 50-day moving average.

The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have been declining over the past three weeks. Both metrics are now below 2% and near their lowest levels of the year, an encouraging development for equity bulls.

While new lows have been declining over the past three weeks, the five-day moving averages of stocks on the NYSE making new six-month and 52-week highs has begun to increase. The metrics remain at a depressed level, but that is to be expected after the carnage that has taken place under the surface of the equity market. Clearing the April peak would be a sign that breadth dynamics are changing for the better.

The percentage of NYSE issues trading above their respective 200-day moving averages rose to 22% this week vs. 20% last week. This slow-moving metric remains in a downtrend and will take time to turn if breadth is truly transitioning from bearish to bullish. The S&P 500 remains below its 200-day moving average.

The percentage of NYSE issues trading above their respective 50-day moving averages rose to 38% from 23% last week.

The percentage of issues on the NYSE trading above their respective 20-day moving averages moved to 70% this week from 46% last week. The S&P 500 has moved above its 20-day moving average.

S&P 500 Breadth

Breadth metrics for the S&P 500 have improved over the past three weeks.

  • Advance/Decline Line: Testing the 50-day moving average from above.
  • Percent Above Their 200-Day Moving Average: 32% from 29% last week.
  • Percent Above Their 50-Day Moving Average: 31% from 23% last week.
  • Percent Above Their 20-Day Moving Average: 70% from 42% last week.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index rose again last week.

  • Advance/Decline Line: Still in a downtrend but testing the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 26% from 21% last week.
  • Percent Above Their 50-Day Moving Average: 40% from 26% last week.
  • Percent Above Their 20-Day Moving Average: 76% from 48% last week.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 moved higher over the past week. 

  • Advance/Decline Line: Moved above the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 18% from 14% last week.
  • Percent Above Their 50-Day Moving Average: 27% from 14% last week.
  • Percent Above Their 20-Day Moving Average: 73% from 36% last week.

Take-Aways:

Breadth metrics have improved for a third consecutive week, something that even the most bearish of bears would be remiss to ignore. The improvements continue to be most pronounced in the short-term data. However, the drop in new lows on the NYSE has certainly captured our attention.

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.