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Key Points

  • NYSE Advance/Decline Line Makes a Lower Low
  • NYSE New Lows Explode to the Upside
  • S&P 500 Metrics Weaken
  • Small Cap Breadth Sustains Damage
  • NASDAQ 100 Metrics Decline on the Week

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NYSE Breadth

The NYSE Advance/Decline has made a lower low after stalling at the declining 50-day moving average. This is in line with the price action for the S&P 500, which has also made a lower low for the cycle after failing to regain the declining 50-day moving average.

The five-day moving averages of issues on the NYSE making new 52-week and six-month lows have exploded to the upside, erasing all the improvement that we have been highlighting over the past few weeks.

The five-day moving averages of stocks on the NYSE making new six-month and 52-week highs have plummeted from an already low level. Both metrics are now less than 1%.

The percentage of NYSE issues trading above their respective 200-day moving averages fell to 14% this week from 22% last week. This indicator remains in a downtrend as the S&P 500 trades below its 200-day moving average.

The percentage of NYSE issues trading above their respective 50-day moving averages fell to 13% from 43% last week. The metric remains under pressure as the S&P 500 trades below its 50-day moving average.

The percentage of issues on the NYSE trading above their respective 20-day moving averages has moved to 13% this week from 72% last week. The S&P 500 failed to hold above the 20-day moving average and has gone on to make a lower low for the cycle.

S&P 500 Breadth

Breadth metrics for the S&P 500 were damaged over the past week.

  • Advance/Decline Line: Trades to a new low for the cycle after losing the 50 DMA.
  • Percent Above Their 200-Day Moving Average: 15% from 31% last week.
  • Percent Above Their 50-Day Moving Average: 5% from 34% last week.
  • Percent Above Their 20-Day Moving Average: 3% from 67% last week.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index were also damaged on the week.

  • Advance/Decline Line: Loses the 50-day moving average.
  • Percent Above Their 200-Day Moving Average: 16% from 28% last week.
  • Percent Above Their 50-Day Moving Average: 17% from 45% last week.
  • Percent Above Their 20-Day Moving Average: 11% from 73% last week.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 moved lower on the week. 

  • Advance/Decline Line: Below the 50 DMA but did not make a lower low.
  • Percent Above Their 200-Day Moving Average: 7% from 21% last week.
  • Percent Above Their 50-Day Moving Average: 9% from 32% last week.
  • Percent Above Their 20-Day Moving Average: 10% from 75% last week.

Take-Aways:

Over the past few weeks, we have been highlighting improvements in the breadth. Last week we wrote: While breadth improvements are encouraging for equity bulls, they are largely just a datapoint until the indexes can reverse their downtrends and begin to move higher. That did not happen. The bulls dropped the ball, and the bears remain in control of the market.

This daily note IS brought to you by Research by Potomac. Access the full Advisor toolkit and get a deeper look at the markets.

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.