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00:00 Speaker A
Let’s talk markets and because it is now time for market show and tell and today we’re looking past the headline index number and into market breadth, which is a way to judge how widespread a market move is by counting how many stocks are participating. We’ve covered this before and there are lots of ways to do this because here’s the main thing. The S&P 500 can look like it’s going nowhere, even when a lot of stocks are quietly getting healthier, some might be getting not healthier.
00:31 Speaker A
So, we’re going to look at market breadth through this lens. How many S&P 500 stocks are trading above their 200 day moving average? The 200 day is just a long-term average of prices that shows the current trend. And when more stocks get above it, that’s a sign that the rally is spreading out, not just riding on a few big names as we’ve seen in the past.
00:54 Speaker A
So, Kevin, when you look at this, uh, breadth measure, what does it tell you right now about how healthy this market really is, even if the index is feeling a bit choppy?
01:05 Kevin
Yeah, so overall, still relatively healthy. If you looked at the whole universe of stocks in the NYSE universe, um, which is, you know, I call it the market. Um, you know, then that’s that’s right at two-thirds as of yesterday’s close. So you’re you’re at a pretty healthy territory um and and and sort of atmosphere, but even over the past several months that that percentage has actually um been grinding higher, a little, you know, slowly, but it’s been grinding higher. Even as you’ve had a lot of this carnage in in certain sectors like tech.
01:31 Kevin
Um and that’s depressed, you know, the index level gains. But um even for something like the S&P 500, you’ve been kind of hovering right around closer to 70% on average lately. and I think what’s been a little bit more remarkable has been the the catchup in that statistic for the Russell 2000.
01:46 Speaker A
The catch up. Yeah, let’s talk about small caps.
01:47 Kevin
doldrums. Yeah. I mean they’ve been so weak for so long in this in this bull market that is that we’ve been in since 2022. Um, you know, sort of had these historic years in a negative sense for small cap participation or lack thereof in 2023 and then 2024. So, we’ve been waiting for so long for them to really get up and going and I think that for many reasons, um strong fundamental reasons, they really have started to turn higher now and they’ve really started to catch up and one of the and one of the metrics that confirms that is is that breadth statistic that you mentioned.