It’s been a while since I highlighted some breadth indicators so here we go. First is the NYSE Advance / Decline line (NYAD). All I can say is Wow! NYAD is telling us that small cap stocks were the place to be coming out of the February low.
Comparing the S&P 500 Equal Weight Index (SPXEW) against the S&P 500 (SPX) shows us how big cap stocks have performed against mega cap stocks. The move out of the February low showed widespread buying of big cap stocks, while mega caps lagged. This was a rotation out of the safety trade. Then we got a bit of consolidation in SPX as investors took some profit in big caps and re-allocated it to mega caps. Now it looks like the market is getting ready to run again, fueled by big caps.
The percent of SPX stocks above their 200 day moving average (SPX200) shows the same picture as SPXEW. Widespread buying of big caps, followed by some consolidation, then renewed widespread buying.
The only fly in the ointment comes from the Bullish Percent Index (BPSPX). It shows the percent of SPX stocks with bullish point and figure charts. The rally out of the Brexit dip hasn’t repaired all of the charts that were broken. This shows that investors are getting more selective. But remember, this chart is still bullish while above 60% so don’t get concerned until then.
During this week’s mini-consolidation all of my core market health indicators improved. This is a good sign for the intermediate term. My measures of market quality are still stubbornly staying below zero, which indicates we may need one more dip before moving higher, but overall the market is on a strong footing.
Measures of breath show the market is currently being supported by a wide range of stocks. Now we just need some enthusiasm to support a rally.