S&P 500 Breadth Weakens as Fewer Shares Clear Key Averages

The share of S&P 500 stocks trading above their 50-day moving average has fallen to 25%, its lowest level since April, according to The Kobeissi Letter. The figure was 70% in mid-August.

Only 47% of stocks are above their 200-day average, also the lowest share since April. On Monday, new 52-week lows on the New York Stock Exchange outnumbered new highs for the 10th straight session and in 14 of the past 15 sessions.

The Kobeissi Letter team called the market breadth deterioration rapid, while saying it was not an ultimate sell signal. Weak breadth means fewer stocks are supporting the index’s advance, the article said.

Investors rotated back into Nvidia and Meta in the third quarter, while moving out of multinational companies facing rising interest rates and commodity prices. Strong corporate earnings offered a positive counterpoint, including Micron’s report late Wednesday.

Strategist Jay Kaeppel, writing in the SentimentTrader report, said investor sentiment did not suggest a major long-term market top had formed. He argued that major tops rarely occur before most investors become euphoric, while noting that market breadth and interest rates point to near-term concerns.