Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

Generals March On, but Fewer Troops are Following – Get the Essential Breadth Indicator ChartList

by February 3, 2024
February 3, 2024
Generals March On, but Fewer Troops are Following – Get the Essential Breadth Indicator ChartList

Divergences reflect a disconnect between price and the indicator. A bearish divergence forms when price forges a higher high and the indicator fails to confirm this high. In the case presented below, we have the S&P 500 moving higher and fewer stocks making it back above their 50 and 20 day SMAs. Fewer stocks are participating in the advance from late December to early February. This shows weakness under the surface and this weakness could extend to the index.

The chart below shows two breadth indicators based on S&P 500 stocks: the percentage of stocks above their 50 and 20 day SMAs. The S&P 500 hit another new high this week, and remains well above its 50 and 20 day SMAs. These two indicators were keeping pace in December, but stumbled over the last few weeks. Overall, sizable divergences are forming and these could foreshadow a correction or pullback in the stock market.

The first indicator window shows SPX %Above 50-day SMA moving above 80% on December 1st and holding above 80% until January 16th (green shading). This indicator then moved below 80% and weaken further into February. The index is at a new high and only 66.40% of its components are above their 50-day SMAs, which means 37.6% are below. Overall, the indicator is above 50%, but fewer stocks made it back above their 50-day SMAs. There is less strength within the S&P 500.

The lower window shows SPX %Above 20-day SMA getting above 80% from November 14th to January 2nd (green shading). This indicator plunged to around 30% in mid January and then rebounded to the 60% area. Again, the S&P 500 is at a new high and far fewer stocks are making it back above their 20-day SMAs.

The S&P 500 is weighted by market cap with the top ten stocks accounting for  32% of the index and the top 50 stocks accounting for 57.34%. This market-cap weighting means divergences in breadth do not always lead to weakness in the index. However, we are also entering a seasonally weak period. Notice that we saw bearish divergences from December 2022 to February 2023 and the index fell around 9% from February 2nd to March 13th, 2023 (yellow shading). Corrections are part of the process.

Interested in Breadth Analysis? StockCharts members who join Chart Trader receive the Essential Breadth Indicator ChartList. Organized in a logical top-down manner, this list has over 100 customized breadth charts covering the major indexes and sectors. There is also an accompanying report and video explaining the charts and indicators. Click here to learn more.

At TrendInvestorPro, we covered this growing divergence and showed a 30 year seasonality chart for the S&P 500 earlier this week. The combination of weak seasonal patterns and deteriorating breadth argues for a pullback. Chart Trader reports and videos are published every Tuesday and Thursday. These include broad market analysis as well as curated setups for trading ETFs and stocks. Click here to learn more.

//////////////////////////////////////////////////

0
FacebookTwitterGoogle +Pinterest
previous post
Strong Earnings Is Driving Sector Rotation Into These 2 Groups
next post
Speaker Johnson reveals $17 billion Israel aid bill, says Senate ‘will no longer have excuses’

You may also like

Is the Correction Over? Or Are We Still...

March 26, 2025

Bottom-Up Stock Picking Made Easy with This Automated...

September 1, 2023

SCTR Report: American Tower is Breaking Out Now;...

October 15, 2024

Earnings for 2023 Q3 Show Market Still Overvalued

January 5, 2024

What Sector Rotation Says About the Market Cycle...

May 15, 2025

Your Burning Questions, Answered: FATE of TESLA &...

September 29, 2023

Coming Up Aces in Clean Energy

September 17, 2022

Q4 Stock Market Outlook: 3 Analysts, 3 Insights

September 18, 2023

Should we Continue Taking Trend Signals after Whipsaws?

February 25, 2023

Precious Metals and Miners Ready to Rally

May 30, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Silver’s Surge is No Fluke—Here’s the Strange Ratio Driving It

      June 6, 2025
    • Friday Feature: Incubate Debate

      June 6, 2025
    • Risch urges ‘top to bottom’ USAID spending review after waste, fraud exposed

      June 6, 2025
    • Universities in Libertarian Land

      June 6, 2025
    • Elon Musk may speak to Trump aides in push to calm feud

      June 6, 2025
    • Everyone Talks About Leaving a Better Planet for Our Children: Why Don’t We Leave Better Children for Our Planet?

      June 6, 2025

    Categories

    • Business (8,149)
    • Investing (2,013)
    • Politics (15,545)
    • Stocks (3,131)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved