A Longer-Term Look at Breadth
It's been pretty well documented over the last few months that an uncomfortable percentage of S&P500 stocks have been trading below their 50-day moving averages. These breadth indicators give us a good idea of what's happening inside of the major averages. And in the short-term, they weren't giving us the best readings.
But longer-term, breadth has held in just fine. This chart shows the percentage of S&P500 stocks that are trading above their 200-day moving averages. It is very difficult for the market to have any kind of sustainable decline when a high percentage of stocks are trading above their 200-day, and therefore in uptrends. Notice how the last 2 market corrections came from divergences in breadth, followed by a break to lower lows in the percentage of stocks above their 200-day. But not this year:
These lows from February and April are definitely the support levels we want to watch in breadth. This has been a reliable indicator that has warned us before that bigger breaks in the market are coming. Since we're looking at the total number of stocks trading above slower, longer-term moving averages, it is much less noisy than looking at a percentage above the 50-day.
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Tags: $SPY $SPX $ES_F