The Start
of a Streak?

Key Points

NYSE Breadth

The NYSE Advance/Decline line has staged a rebound to attack the declining 50-day moving average. The improvement is notable but so far has not gone far enough to change the fact that this indicator remains in a downtrend. At the same time, the S&P 500 has retaken its 50-day moving average after a strong rebound from the 4,200 level.

In a welcome sign, the five-day moving averages of issues on the NYSE making new 52-week and six-month lows have taken a turn to the downside. The six-month metric has actually made a series of lower highs and lower lows since the January peak. Equity bulls want to see these metrics remain pinned as close to the floor as possible as the S&P 500 holds above the key support levels that we have been highlighting in our work.

While it is encouraging to see new lows make a move to the downside, bulls also want to see the five-day moving averages of stocks on the NYSE making new six-month, and 52-week highs begin to improve in a sustained way. That goal has been elusive this year. Yes, these metrics have turned higher this week, but they have yet to make a higher high.

As the S&P 500 does battle with the 200-day moving average, the percentage of NYSE issues trading above their respective measures of long-term trend have increased on the week, moving from 26% to 28%. While this improvement is encouraging, we have seen this before, and the current level is still suppressed. Bulls want to see a steady improvement that breaks the downtrend and begins to work back toward the 50% level.

The percentage of NYSE issues trading above their respective 50-day moving averages rose to 40% from 31% last week, spiking to the upside and logging a second consecutive week of improvement. Ideally, the bulls want to see this metric above the 60% mark to indicate that a healthy majority of issues are in an intermediate-term uptrend.

The percentage of NYSE issues trading above their respective 20-day moving averages rose on the week, moving from 45% to 57%. The improvement in this short-term metric for a second consecutive week is a step in the direction of healing the bout of bad breadth that has plagued the market for some time. The S&P 500 is also holding above its 20-day moving average, and that moving average is beginning to turn higher.

S&P 500 Breadth

Breadth metrics for the S&P 500 have improved for a second consecutive week.

• Advance/Decline Line: Wrestling with the declining 50-day moving average.
• Percent Above Their 200-Day Moving Average: 45% from 42% last week.
• Percent Above Their 50-Day Moving Average: 47% from 40% last week.
• Percent Above Their 20-Day Moving Average: 71% from 66% last week.

Small Cap Breadth

Breadth metrics for the S&P 600 Small Cap Index fell on the week.

• Advance/Decline Line: Below the 50-day moving average.
• Percent Above Their 200-Day Moving Average: 38% from 41% last week.
• Percent Above Their 50-Day Moving Average: 44% from 46% last week.
• Percent Above Their 20-Day Moving Average: 49% from 63% last week.

NASDAQ 100 Breadth

Breadth metrics for the NASDAQ 100 improved over the past week.

• Advance/Decline Line: Rallies back to the declining 50-day moving average.
• Percent Above Their 200-Day Moving Average: 36% from 27% last week.
• Percent Above Their 50-Day Moving Average: 47% from 30% last week.
• Percent Above Their 20-Day Moving Average: 77% from 62% last week.

Take-Aways: